Jan 29, 2020

First trillion-dollar deficit not caused by the Great Recession

Data: Congressional Budget Office; Chart: Axios Visuals

The Congressional Budget Office expects the U.S. budget deficit will top $1 trillion in fiscal year 2020, the first trillion-dollar deficit in history not caused by the Great Recession.

Why it matters: The deficit is rising at a time of exceptionally low unemployment and solid economic growth, rather than during a crisis, which is typically when spending elevates.

  • Deficits are expected to remain above $1 trillion indefinitely, rising to $1.7 trillion in 2030, with the total debt held by the public rising to 98% of GDP in that time.

Details: CBO projects real economic growth of 2.2% this year and an average of 1.7% through 2030.

  • Unemployment is expected to rise to 4.4% during that time.
  • Interest rates are projected to rise above 3%.
  • Inflation is projected to remain at 2%, meaning the estimates are priced for an almost ideal backdrop.

Don't sleep: The deficits in the latest projections are $160 billion higher through 2029 than in CBO’s prior baseline, the Committee for a Responsible Federal Budget (CRFB) points out.

  • "This is the net effect of roughly $500 billion in new debt from tax cuts in December’s appropriations package, partially offset by economic and technical changes."
  • The 2020 deficit is also dramatically higher than just five years ago when the deficit totaled $442 billion.

What they're saying: "Every year we set a new post-war record for debt as a share of the economy, every year the Congressional Budget Office warns that debt is rising unsustainably, and every year our largest trust funds get closer to depleting their reserves," CRFB president Maya MacGuineas says in a statement.

  • "Ignoring what is staring us right in the face is fiscal malfeasance."

Go deeper:

Go deeper

U.S. deficit projected to exceed $1 trillion in 2020

Illustration: Aïda Amer/Axios

The U.S. government's budget deficit is projected to top $1 trillion in 2020, according to the latest Congressional Budget Office report released Tuesday.

The big picture: If the projections pan out, this would be the first time since 2012 the deficit hit $1 trillion. In 2020, deficits are expected to increase from 4.6% of GDP to 5.4% in 2030 — growing to the highest sustained levels since World War II, according to the report.

Go deeperArrowJan 28, 2020

Trump's budget proposal relies on highly unlikely expectations

Reproduced from WSJ.com; Chart: Axios Visuals

President Trump is expected to double down on big spending and tax cuts when he releases his budget proposal for fiscal year 2021 later today.

The big picture: The budget proposes increases in defense spending and other categories and also assumes the annual budget deficit will fall from more than $1 trillion in 2020 to around $200 billion, largely as a result of increased U.S. growth.

Buttigieg says Democrats should be concerned about the deficit

Photo: Win McNamee/Getty Images

Pete Buttigieg said at a town hall in New Hampshire Sunday that the "time has come" for Democrats to do something about the budget deficit, which is projected to exceed $1 trillion under President Trump in 2020, NBC News reports.

Why it matters: The 2020 Democratic field has focused little on the question of reducing the national debt, with Buttigieg himself acknowledging that it's "not fashionable in progressive circles."