In an analysis of the budget released Thursday, the CBO said the Trump plan will shrink the deficit relative to the size of the overall economy, but it projects a budget deficit ten years from now that’s far larger than the Trump administration’s estimates.
The White House projects that the budget could tip into a surplus of $US16 billion by the fiscal year 2027, from a $US585 billion deficit in the most recent year, but the CBO’s estimates suggest a deficit of $US720 billion in 2027.
The Trump proposal, which isn’t a detailed budget, was released in May and immediately met with criticism over its growth projections and assumptions. For example, predictions of long-term deficit reduction are based on the idea that annual economic growth will hit 3% once tax cuts “prime the pump.” That’s well over the average rate of growth since 1980, which is about 2.6%.
“Nearly all of that difference arises because the Administration projects higher revenue collections — stemming mainly from a projection of faster economic growth,” the CBO said.
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