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A4 U.S. NEWS
Wednesday 29 January 2020

Budget deficit to break $1

trillion despite strong economy

By ANDREW TAYLOR ing last year and the repeal growth rate is predicted to
Associated Press in December of several hit average 2.2 percent this
WASHINGTON (AP) — An taxes used to help finance year.
annual congressional re- the Affordable Care Act. "The economy's perfor-
port says the U.S. bud- Those have combined to mance makes the large
get deficit is likely to burst deepen the government's and growing deficit all the
through the symbolic $1 tril- deficit spiral well on into more noteworthy," said
lion barrier this year despite the future, with trillion-dollar CBO Director Phillip Swa-
The Capitol is seen as defense arguments by the Republicans a healthy economy. deficits likely for as far as gel. "Changes in fiscal pol-
resume in the impeachment trial of President Donald Trump Tuesday's Congressional the eye can see. icy must be made to ad-
on charges of abuse of power and obstruction of Congress, in
Washington, Monday, Jan. 27, 2020. Budget Office report fol- The annual CBO update dress the budget situation,
Associated Press lows a burst of new spend- of the government's eco- because our debt is grow-
nomic and fiscal health es- ing on an unsustainable
timates a $1 trillion deficit path."
for the ongoing fiscal year, The government reported
which would bring the red a $984 billion deficit for the
ink above $1 trillion for the 2019 budget year. Cumula-
first time since 2012, when tive deficits over the com-
former President Barack ing decade are expected
Obama capped four con- to total $13 trillion — a to-
secutive years of $1 trillion- tal that would have gone
plus budget deficits. The higher save for CBO's be-
government, slated to lief that yields on Treasury
spend $4.6 trillion this year, notes will remain unusually
would have to borrow low as the government re-
22 cents of every dollar it finances its $23 trillion debt.
spends. The recent surge in the
Most economists say the deficit has followed pas-
most relevant way to look sage of the 2017 Trump
at the deficit is to measure tax bill, which has failed
it against the size of the to pay for itself with addi-
economy, with deficits at tional economic growth
3 percent or so of gross do- and revenues as promised
mestic product seen as sus- by administration figures
tainable. The latest report like Treasury Secretary Ste-
shows deficits averaging ven Mnuchin. The surge in
4.8 percent of GDP over deficits also follows a final
the course of the coming rewrite last summer of a
decade. failed 2011 budget deal to
"As a result of those defi- increase spending of both
cits, federal debt would defense and domestic pro-
rise each year, reaching grams.
a percentage of the na- CBO holds a traditional
tion's output that is unprec- view of economists that
edented in U.S. history," the debt that's too high has
CBO report says. a "crowding out" effect
Obama's deficits came as on private sector invest-
the U.S. economy recov- ment in the economy and
ered from the deep reces- can lead to higher interest
sion of 2007-2009. rates and maybe even a
The return of trillion-dollar European-style debt crisis.
deficit now comes as the But interest rates have re-
economy is humming on mained low despite CBO's
all cylinders, with the CBO alarms and more liberal
predicting that the job- economists hold a much
less rate nationwide will more dovish view of the ef-
average below 4 percent fects of higher deficits on
through at least 2022. The the economy.q