President Budget Would Add More than $10 Trillion to the Debt
President Donald Trump released a portion of his fiscal year 2020 budget Monday, which proposes a number of tax and spending policies that it estimates would reduce debt from 78 percent of GDP today to 71 percent of GDP by 2029. The budget also projects real economic growth will average about 3 percent per year over the next decade, more than a percentage point above what most other public and private forecasters predict. For a more complete look at the President’s budget, see our quick blog. A full analysis will follow later today.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
President Trump’s budget aims to reverse an unsustainable fiscal situation and put debt on a downward path relative to the economy. Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.
Even full of accounting gimmicks meant to paper over deficits, the President’s budget would still borrow $7.8 trillion over the next decade. Under reasonable economic assumptions, however, we find it would be closer to $10.5 trillion.
President Trump has already signed into law debt-financed tax cuts and spending increases that will add $2.3 trillion to the debt over the next decade, despite budgets that proposed revenue-neutral tax reform and spending reductions. This budget does nothing to address or pay for these expanded deficits – in fact, it assumes the tax cuts are extended without even recognizing the cost.
Perhaps most disappointing is the decision to continue and expand recent defense increases by funding almost $100 billion in new spending through an off-book emergency war account. This Overseas Contingency Operations (OCO) gimmick is not new, but the proposed abuse of this account rises to a new level never before seen and sets a dangerous precedent.
Meanwhile, a fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget. Every independent forecaster foresees growth to average closer to 2 percent over the next decade. Assuming an extra point of growth serves no purpose but to mask the high deficits and debt likely to materialize under the President’s budget.
Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the deep hole that policymakers have dug in recent years.
If the past two years are any indication, this budget will be followed by more debt, not debt reduction. On our current course, Americans will soon face record levels of debt, leading to slower income growth, increased interest payments, and less opportunity. Read more