Trillion-Dollar Deficits Returning to America

As if Republicans didn’t face enough hurdles in their sprint to cut taxes, here’s another one: $1 trillion annual deficits are rushing back to Washington.

A new analysis from the Bipartisan Policy Center adds new disaster relief spending and the costs of GOP tax-cut plans to earlier projections from the Congressional Budget Office. Its conclusion: The deficit could reach $1 trillion as early as 2019–four years earlier than the CBO calculated in January, CNBC reported.

The only previous episode of trillion-dollar annual deficits began during the Great Recession and financial crisis. As the economy recovered, the deficit fell below that level in 2013. But now, as retiring baby boomers rapidly swell the rolls of Social Security and Medicare, trillion-dollar deficits are on track to return during a strong economy.

“These projections foreshadow another period of trillion-dollar deficits at a time when the United States has experienced one of the longest continuous economic expansions in history and an unemployment rate of 4.5%,” the center’s analysis concludes.

Noting deficit trends since 1980, the analysis adds that the nation “has piled up debt more than twice as fast as economic growth.” In January, the CBO projected a fiscal 2018 deficit of $48 billion, rising to $1 trillion by 2023. Over the 10-year period from 2018-2027, it forecast deficits totaling $9.4-trillion.

By June, the CBO revised all those numbers to reflect more-than-expected red ink. It pegged the 2018 deficit at $563 billion, a $1.02 trillion deficit in 2022, and 10-year deficits of $10.1-trillion.

The Bipartisan Policy Center analysis updates those projections. It assumes $200 billion over 10 years for the costs of recent wildfires, hurricane damage and flooding. And it folds in the $1.5 trillion in higher deficits allowed by the new budget resolution congress has passed to smooth the way for tax cuts.