Federal debt will rise more rapidly and the economy will grow stronger than expected due to recent tax and spending legislation signed into law by President Donald Trump, according to a report released by the Congressional Budget Office.
"Debt will be high and rising," CBO Director Keith Hall said at a press conference Monday. "Our forecast beyond 10 years does nothing but show rising debt-to-GDP ratio."
Citing projected revenue loss from the new laws, the agency now estimates the 2018 deficit to be $242 billion larger, and the 2018-2027 cumulative deficit to be $1.6 trillion larger, than it projected in June 2017.
"The increase stems primarily from tax and spending legislation enacted since then, especially the 2017 tax act, the Bipartisan Budget Act of 2018 and the Consolidated Appropriations Act of 2018," Hall said.
Strong economic growth will accompany the wider deficit this year and the next, mostly driven by the 2017 tax act, followed by moderate growth after 2020, according to the CBO.
The 2017 Tax Act, also known as the Tax Cuts and Jobs Act, was passed by congressional Republicans and signed into law by Trump last December.
"CBO's current economic projections differ from those that the agency made in June 2017 in a number of ways," the agency said in its report. "The most significant is that potential and actual real GDP are projected to grow more quickly over the next few years."
In Monday's press conference, Hall noted that the CBO's projections assume current laws stay roughly the same. This means that, among other things, the estimates depend on certain provisions of the 2017 tax law expiring as they are scheduled to over the next decade, as well as investors and businesses making decisions based on those expiring provisions.
"We have to now worry about, well, do people really believe that taxes are going to go back up after 2025? How many believe they will be extended?" Hall said. "So we have to deal with expectations a little bit. That sort of adds to the uncertainty of our forecast."