The tax cuts and spending increases in the U.S. budget deficit are estimated to exceed $1 trillion by 2020. According to the Congressional Budget Office, these tax cuts signed by President Donald Trump will cause a failure in boosting the long-term economic growth. The revenue shall be surpassed by the national spending with $804 billion in the fiscal year in September. This will increase budget deficits since the projected amount in June was $563 billion. The effects run to the fiscal year 2019, where the deficit is projected to reach $981billion, an amount high than the actual projection of $689 billion (Wasson & McGregor, 2018).
According to the CBO’s report last June, the trillion-dollar level is contrary to a 2022 achievement in the nation’s budget gap. However, the increased growth of deficits in Trump’s administration due to a tax overhaul tends to curve to low federal revenue; thus, this will negatively affect the U.S. debt significantly. Investors should now worry due to the arising tariff threats between the U.S. and China that pose a potential negative impact on the world economy. The recent tax and spending legislation have led to more debt on the existing unsustainable trajectory. This will lead to a major damage in the fiscal outlook of the nation’s budget. It will also stimulate a rise in real GDP more than the potential GDP in the coming years. The unemployment rate will, however, see a decrease to 3.3% in 2019 (Wasson & McGregor, 2018). Consequently, there will be a reduction in personal income tax rates in the future. I think the recent fiscal measures predicts an increase in pressure on matters such as health care due to an aging American population.
ReferencesWasson, E., & McGregor, S. (2018, April 9). U.S. Deficit to Surpass $1 Trillion Two Years Ahead of Estimates, CBO Says. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2018-04-09/u-s-budget-deficit-to-balloon-to-1-trillion-by-2020-cbo-says
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