A six-year trend of declining federal budget deficits will end this year, sooner than expected, the nonpartisan Congressional Budget Office reported on Tuesday — a development that injects new questions into the presidential race for candidates proposing trillions of dollars in new tax cuts or spending.
Budget analysts had already forecast that annual deficits would begin growing again as the nation confronts the health and retirement costs of its aging population, but the shift was expected to happen after 2018. The budget office now says the reckoning will arrive sooner, in large part because Congress and President Obama agreed late last year to permanently extend a raft of tax cuts for corporations and individuals.
The deficit for this fiscal year, which ends Sept. 30, is projected to be $544 billion — $105 billion more than last year, and $130 billion more than the budget office had projected last August. Over 10 years, through fiscal year 2025, deficits would add up to $1.5 trillion more than the budget office had predicted…
Falling Deficit to Reverse Course in 2016 as U.S. Ages https://t.co/l1qXeojz46
— NYT Politics (@nytpolitics) January 20, 2016
Democratic presidential candidates, including Hillary Clinton and Senator Bernie Sanders of Vermont, have proposed spending increases for a range of domestic initiatives. They would pay for the new initiatives by raising taxes on the rich, making such tax increases unavailable for deficit reduction.
Republican presidential candidates face bigger questions in light of the new fiscal outlook, since most have proposed new, deep tax cuts, especially for the wealthy and corporations. The most generous by far is the plan of the leading Republican candidate, Donald J. Trump, which nonpartisan analyses have estimated to cost about $10 trillion over 10 years. That would double the total deficit increase projected over the next decade.
The tax cut plans are “profoundly irresponsible,” said Steve Bell, senior director of economic policy at the Bipartisan Policy Center, and a Republican who headed the Senate Budget Committee staff in the Reagan era. “It just leaves guys like me speechless. Those are Republicans.”
Over the long term, according to the budget office, the rise in annual deficits and debt “is mainly attributable to the aging of the population and rising health care costs per person.”