New GOP Norm Is Trillion Dollar A Year Federal Deficits

The chart above (from MarketWatch) shows the federal debt projected by the CBO before the Republicans passed their massive tax cuts for the rich and corporations. Thanks to those cuts, the areas in red on the chart above will be much larger.

The Republicans have always claimed to be the party of fiscal responsibility. That wasn't actually true. They just wanted to do their spending on the military instead of programs to help most Americans. But their new tax cut, coupled with their profligate spending, means they have tossed fiscal responsibility out of the window.

They have ushered in a new era of yearly minimum deficits of at least a trillion dollars a year, which will balloon the federal debt far faster and bigger than ever before.

The following is just part of an article by Stan Collender at Forbes.com:

The new U.S. normal of $1 trillion or more annual federal budget deficits will officially begin this week when the Congressional Budget Office releases its economic and budget outlook report showing that the deficit will be at least that high every year Donald Trump is president.

Although there have been private sector projections for months (including my post from last October) that the government's red ink will hit and exceed a trillion dollars for years to come, this will be the first report by Congress's official budget watchdog since last year's big tax cut and this year's spending deal were enacted that will show the deficit rising precipitously and staying at that very high level through the next 10 years.

The official CBO projections are likely to be lower than the budget deficits that actually occur. CBO's report is based on current law and makes no political judgements about what Congress and the president will do in the future. That means the deficit projections will be based on the presumption that the tax cuts enacted last year that currently phase out will in fact end. That means the CBO forecast will assume that future revenues will be higher and the deficit lower compared to what is likely to occur.

The same is true for spending. For this report, the Congressional Budget Office doesn't presume that any of the reductions proposed in the Trump 2019 budget will be enacted. That will increase the deficit outlook compared to what the White House will say it will be.

For the record (and before the trolls come out to play), there were indeed four consecutive trillion dollar federal deficits during the Obama administration from fiscal 2009-2012. Those deficits were primarily caused by the Great Recession and were temporary. By contrast, the trillion dollar Trump deficits are permanent changes to the federal budget outlook caused by enacted reductions in revenues and increases in spending.

The Trump deficits assume a relatively high-level of economic growth. If the economic outlook doesn't turn out to be as rosy as the White House is promising, the very high Trump era federal budget deficits will be even higher.