- President Donald Trump released his annual budget proposal on Monday.
- While the budget is simply a statement of principles and will likely be drastically changed by Congress, the document does illuminate Trump and the White House’s thinking.
- The budget assumed that the annual deficit will eclipse $US1 trillion next year and that the US will continue to increase the national debt through 2029.
- In 2016, Trump promised to totally wipe out the national debt over eight years in office.
- The budget indicates the White House no longer thinks that’s possible.
In April 2016, then-candidate Donald Trump promised the $US19 trillion national debt would be eliminated “over a period of eight years” during an interview with The Washington Post.
But Trump’s latest budget, released Monday, shows that instead of shrinking the US’s record debt load the president is adding to it.
According to the budget, which is mostly a statement of principles and will likely undergo major revisions in Congress, the annual budget deficit – the difference between how much revenue the government brings in and how much it spends – will reach $US1.1 trillion in fiscal years 2019 and 2020.
The US has run a deficit of $US1 trillion or more only 4 times, from 2009 to 2012, as the country dealt with the catastrophic effects of the financial crisis.
By contrast, Trump’s budget assumed deficits will rise, even with a stronger economy. But the budget also projects a large increase in defence spending, while revenues are expected to come in much lower than previous projections because of the Republican tax reform law – the Tax Cuts and Jobs Act (TCJA).
In 2017’s budget proposal, the White House projected a deficit of only $US488 billion in fiscal year 2020. But the projected deficit for 2020 in Monday’s budget is double the 2017 projection because of a $US337 billion decrease in the revenue estimate and a $US276 billion increase in the spending estimate.
The deficit assumptions in Trump’s budget eventually improve. By 2029, the annual deficit drops to $US202 billion, but even the improved picture would add debt, contrary to Trump’s promise to pay off that debt.
But according to an analysis by the Committee for a Responsible Federal Budget (CRFB), the deficit reduction relies on a number of rosy assumptions about economic growth and spending cuts.
“The budget assumes real GDP growth will average around 3 per cent over the next decade. This is substantially higher than estimates from other mainstream economic forecasters – who project growth rates closer to 2 per cent per year over the next decade,” the CRFB analysis said. “Absent these rapid growth assumptions, debt under the President’s budget would likely be about $US2 trillion higher by 2029. And debt as a share of GDP would reach roughly 85% to 90%.”
Typically, presidential budgets are more positive than other projections, and Trump’s rosy outlook is no different. But most presidents don’t make a promise to totally wipe out the national debt in eight years.
G. William Hoagland, a senior vice president at the Bipartisan Policy Center, said in a statement on Monday that Trump’s budget was not a serious attempt to reduce the deficit and deal with the US debt load.
“Today’s budget release makes clear, however, that curtailing the ballooning deficit is not among the Trump administration’s priorities. It should be,” Hoagland said.
While Trump’s budget is more of a wish list, the deficit projections in the short-term do roughly line up with forecasts from the Congressional Budget Office (CBO).
According to the CBO’s latest budget projections, the annual deficit will hit $US903 billion in 2020 and eclipse $US1 trillion annually in 2022. In contrast to the president’s budget, the CBO does not expect a decline in the deficit over time, and by fiscal year 2029, the projected annual deficit will hit $US1.3 trillion.
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