18 August 2018

Trump’s 2019 Budget Underestimated New Debt

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Remember President Trump’s 2019 budget — that big document released in February and then immediately dismissed or ignored? Well, a new analysis released Thursday by the nonpartisan Congressional Budget Office finds that the president’s proposal won’t rein in rising deficits like the White House claims.

CBO estimates that, over the 10 years from 2019 to 2028, the Trump budget request would cut the deficit by $2.9 trillion compared to the current baseline. The White House estimated that the deficit reduction over that time would total $5.2 trillion.

The White House had estimated that the deficit would be $450 billion in 2027 and $445 billion in 2028. CBO, by contrast, sees deficits of $965 billion and $1.1 trillion for those years under the Trump budget.

In all, CBO says Trump's budget would result in cumulative deficits of $9.5 trillion over the next decade compared to $7.2 trillion estimated by the White House.

Under the president’s budget, federal debt held by the public would rise from about 78 percent of GDP this year to 86 percent in 2028. That’s lower than the 96 percent CBO projects in its current baseline, but higher than the 73 percent the White House had estimated.

The bottom line: The big differences between CBO’s numbers and those from the White House Office of Management and Budget are mostly the result of vastly different economic assumptions, according to the Committee for a Responsible Federal Budget: “OMB projects real GDP growth averaging 3 percent over the next decade while CBO's projects an average of 1.8 percent. Largely as a result, CBO estimates $1.95 trillion less in revenue than OMB – which constitutes 85 percent of the total difference over 2019 to 2028.” 

Click here for the original article from Yahoo Finance.

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