World Economy

Trump Budget to Add $2.3t to Deficits

Trump Budget to Add $2.3t to DeficitsTrump Budget to Add $2.3t to Deficits

US President Donald Trump’s proposed budget would add $2.3 trillion more to deficits over the next decade than the White House estimated, the Congressional Budget Office said Thursday.

CBO, Congress’ agency for producing budget analyses, said Trump’s fiscal year 2019 budget would add $9.5 trillion to total deficits over the decade, not the $7.2 trillion the White House projected. The difference is mostly attributable to the CBO’s estimate of slower economic growth. Less growth means smaller tax collections and thus higher deficits, Yahoo Finance reported.

Thursday’s analysis applied to the budget proposal that the White House submitted in February. The White House budget proposal is not law or legislation, but rather a document spelling out the administration’s preferences for taxing and spending over the next 10 years.

In analyzing it, the CBO was effectively checking the work of the Office of Management and Budget, which is responsible for drafting the budget. The CBO thinks that the early years of the Trump budget would actually see lower deficits than the White House thought. But in later years, deficits would eventually grow to double what the White House thought, as revenues come in short of their expectations.

Ultimately, the debt would rise from about 78% of gross domestic product this year to 86% by 2028. In comparison, the White House maintained that its budget would lower the debt as a percentage of GDP.

 Rolling Back Bank Regulations

Trump signed the biggest rollback of bank regulations since the global financial crisis into law Thursday, CNBC reported.

The measure designed to ease rules on all but the largest banks passed both chambers of congress with bipartisan support. Backers say the legislation will lift burdens unnecessarily put on small and medium-sized lenders by the Dodd-Frank financial reform act and boost economic growth.

Opponents, however, have argued the changes could open taxpayers to more liability if the financial system collapses or increase the chances of discrimination in mortgage lending.

“Dodd-Frank was something they said could not be touched. And honestly, a lot of great Democrats knew that it had to be done and they joined us in the effort,” Trump said before he signed the bill, surrounded by lawmakers from both major parties. “And there is something so nice about bipartisan, and we’re going to have to try more of it. Let’s do more of it.”

The measure eases restrictions on all but the largest banks. It raises the threshold to $250 billion from $50 billion under which banks are deemed too important to the financial system to fail. Those institutions also would not have to undergo stress tests or submit so-called living wills, both safety valves designed to plan for financial disaster.

It eases mortgage loan data reporting requirements for the overwhelming majority of banks. It would add some safeguards for student loan borrowers and also require credit reporting companies to provide free credit monitoring services.

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