US deficit seen ballooning over USD 1 tn this year: CBO

The US budget deficit is expected to swell this year to over USD 1 trillion and remain above that level for a decade as government debt balloons, the independent Congressional Budget Office has said.

Because of the large deficits, CBO said the US debt will grow to 98 per cent of the size of the American economy by 2030 -- the highest share since 1946 -- and continue to rise "far higher than it has ever been" to 180 per cent of GDP by 2050.

Following President Donald Trump's massive tax cut package at the end of 2017, the deficit has been marching higher, despite administration promises that reducing taxes for corporations and the wealthy would pay for themselves.

The budget gap came in just under the USD 1 trillion mark last year but is expected to average USD 1.3 trillion from 2021 through the end of the decade, according to CBO's latest forecasts.

While low US interest rates have reduced the cost of the debt, which helps hold down projected deficits, the CBO said "a combination of recent legislation and other changes increased them."
The agency forecast US economic growth will be 2.2 per cent this year, adjusted for inflation, "largely because of continued strength in consumer spending and a rebound in business fixed investment."