Aug 21, 2019 - Economy

U.S. budget deficit set to hit $1 trillion 2 years earlier than expected

A photo of the U.S. Capitol Building.

Photo: Rarrarorro/Getty Images

A new report from the Congressional Budget Office shows that the U.S. budget deficit is expected to breach $1 trillion by 2020, two years earlier than previously projected.

The big picture: The growing deficit has been driven by President Trump's tax cuts, increased government spending and rising health care costs. The shortfall is expected to be widened by the recent budget deal reached by Trump and Congress to lift spending caps by $320 billion, as well as the emergency spending package that Congress passed to help manage the migrant crisis at the U.S.-Mexico border, the Washington Post reports.

By the numbers: The U.S. budget deficit is expected to hit $960 billion this year and reach a $1.2 trillion average per year between 2020 and 2029.

  • The deficit projection for 2019 is up $63 billion from the CBO's last report in May.
  • The CBO says Trump's tariffs have affected business investment and are expected to make gross domestic product 0.3% smaller by 2020 than it otherwise would have been. Additional tariffs could curb growth even further.
  • Trump's trade wars are projected to reduce average income by $580 per U.S. household, The Hill reports.

Of note: CBO director Phillip Swagel told CNBC the deficit is expected to be even more strained after 2029, as a boom in aging population, increased interest costs and health care spending will have taken its toll.

Between the lines: Axios' Jim VandeHei notes that Trump "promised in a 2016 interview, with the WashPost's Bob Woodward and Robert Costa, to wipe out the national debt in eight years. Instead, he's increased the deficit and inflated the debt by trillions."

Go deeper ... Chart: How the U.S. budget deficit has fluctuated since the 1980s

Editor's note: The attribution for the last quote was corrected, to show it was written by Jim VandeHei.

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