As the House prepares to vote this week on a largely symbolic balanced-budget amendment to the Constitution, its own budget watchdog delivered a stark reality check Monday that forecasts the return of $1 trillion-plus annual deficits and a ballooning public debt that will approach $29 trillion by the end of the next decade.
"If current laws governing taxes and spending generally remained unchanged, the federal budget deficit would grow substantially over the next few years," the nonpartisan Congressional Budget Office wrote in its 10-year budget forecast, "with accumulating deficits driving debt held by the public to nearly 100 percent of GDP by 2028."
The CBO regularly offers economic forecasts, but the latest report is the first since the GOP enacted a $1.5 trillion tax cut, as well as a two-year spending blueprint that increases funding for the Pentagon and domestic programs. A $1.3 trillion 2018 spending bill was approved last month with bipartisan support as a result of that deal.
The CBO today forecasts the budget deficit — the amount Congress spends in excess of what it takes in from tax revenues — for 2018 will be $804 billion, will once again cross the $1 trillion threshold starting in 2020 and will continue to climb through 2028 with no end in sight.
There were $1 trillion deficit spending years most recently under President Barack Obama, primarily due to the economic downturn during the Great Recession, but deficit spending had been decreasing in recent years.
While the GOP's tax cuts are a driving factor of new deficit spending, the tax cuts are also projected to boost earlier forecasts for economic growth and unemployment. CBO says the tax cuts will boost the economy by an average of 0.7 percent and create 1.1 million more jobs over the next decade than previously anticipated.
Politically, that is good news for Republicans in Congress in the short term who are running for re-election in 2018 on a message of economic revival. CBO also projects 3.3 percent GDP growth in 2018 and 2.4 percent in 2019 — both higher estimates than CBO forecast last year. At the same time, the long-term budget forecast counters the GOP's arguments that tax cuts will pay for themselves through economic growth. GDP growth is forecast to slow down after 2020, in part because all of this economic stimulus is likely to drive up interest rates.
Meanwhile, the House is scheduled to vote Thursday on a constitutional amendment that would prohibit Congress from spending more than the government takes in annually, unless a supermajority of both chambers votes to exceed those limits.
The timing of the balanced-budget debate — after Congress agreed to cut taxes and spend more money that will substantially grow the deficit and debt — has longtime budget hawks once again scolding lawmakers for rhetoric that does not meet reality.
"Anyone who argues this course can continue is living with blinders," said Campaign to Fix the Debt Co-chairmen Judd Gregg, a former GOP senator, and Ed Rendell, a former Democratic governor. "CBO's annual report is a reminder that the situation is getting worse, not better, and the day of reckoning is fast approaching."
The House vote is aimed more at the politics of a midterm election in which lawmakers can cast a vote that says they care about deficits, even as Congress has done the opposite. It's a symbolic debate because the amendment does not have the support it needs to become law. Two-thirds of the House and the Senate have to approve any changes to the Constitution, which then need to be ratified by three-fourths of the states.