The non-partisan Congressional Budget Office (CBO) expects the Republican tax reform bill and 2018 congressional budget agreement to grow the economy over the coming years, but adds nearly $2 trillion to federal deficit over the next decade.
The CBO released analysis Monday detailing how the federal budget deficit will be $804 billion in 2018 and exceed $1 trillion in 2020. Publicly held U.S. debt will total $28.671 trillion by the end of 2028, amounting to over 96 percent of U.S. gross domestic product (GDP) that year.
Republican tax cuts are expected, as leadership has repeatedly claimed, to grow the economy over the next two years. Real GDP will expand 3.3 percent in 2018 and 2.4 percent in 2019. Starting in 2020, those gains are expected to taper off. The CBO expects real GDP to grow 1.8 percent in 2020, continuing at an average annual rate of 1.7 percent from 2020-2026.
CBO economists’ and budget hawks typically release their annual report in January, but it was delayed this year to include major fiscal policy changes enacted at the end of 2017, like the GOP tax bill. The analysis also includes the February budget deal, which ballooned federal spending caps some $300 billion, and March spending bill that increased domestic and military spending.
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