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Wednesday, March 6, 2019

Deficits Will Increase

Damian Paletta at WP:
The federal budget deficit ballooned rapidly in the first four months of the fiscal year amid falling tax revenue and higher spending, the Treasury Department said Tuesday, posing a new challenge for the White House and Congress as they prepare for a number of budget battles.
The deficit grew 77 percent in the first four months of fiscal 2019 compared with the same period one year before, Treasury said.
The total deficit for the four-month period was $310 billion, Treasury said, up from $176 billion for the same period one year earlier.
“It’s big tax cuts combined with big increases in spending when they already had big deficits,” said former Senate Budget Committee chairman Kent Conrad (D-N.D.). “So guess what, it’s craziness!”
From CBO:
According to CBO’s estimates, the laws that were enacted during the first session of the 115th Congress will increase budget deficits in every fiscal year from 2017 through 2026 but will decrease the deficit in 2027. In total, CBO estimated, those laws will add about $1.5 trillion to the cumulative deficit over the 2017–2027 period. The largest estimated increase in the deficit stems from Public Law 115-97, the major tax legislation enacted in December 2017, which amended numerous provisions of U.S. tax law and reduced most income tax rates for individuals and corporations. At the time that P.L. 115-97 (H.R. 1) was considered by the Congress, CBO and the staff of the Joint Committee on Taxation (JCT) estimated that its enactment would increase the deficit in every fiscal year from 2017 through 2026 before decreasing it in 2027. In total, CBO and JCT estimated, P.L. 115-97 would decrease revenues by about $1,649 billion and would decrease outlays by $194 billion over the 2018–2027 period, for a net effect on the deficit of $1,455 billion.

Laws enacted during the second session of the 115th Congress increased the deficit in fiscal year 2018 and will increase the deficit further in each year from 2019 through 2022, according to CBO’s estimates. However, CBO anticipates that those increases will be mostly offset by decreases in the deficit in 2026, 2027, and 2028—mainly because of provisions enacted in division C of the Bipartisan Budget Act of 2018 (P.L. 115-123). Among other effects, those provisions extend through 2027 the automatic reductions (or sequestration) to mandatory accounts required by the Budget Control Act of 2011, increase certain aviation security and customs user fees, and allow for additional oil to be sold from the Strategic Petroleum Reserve. In total, CBO estimates, the mandatory spending and revenue effects of laws enacted during the second session of the 115th Congress will increase deficits by less than $500 million over the 2018–2028 period.