Trump’s Tax Cuts set the U.S Budget Deficit to $1Trillion

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The U.S President Donald Trump’s tax cuts and spending policies are driving faster-than-expected growth in the U.S budget deficit. The deficit is a debt-funded gap between the government takes in through taxes and other sources of revenue, and what it spends. The U.S Congressional Budget Office said in updated forecasts issued on Wednesday that it will reach 960 billion U.S dollars for the fiscal year 2019 and it will end on 30 September. The gap will then increase to 1 trillion U.S dollars for the fiscal year 2020. The updated projections indicate deficits increasing and damage from Trump’s tariffs mounting as it was faster than the previous prediction from office.

The budget office said in May that the deficit is expected for 2019 at 896 billion U.S dollars and 892 billion U.S dollars for 2020. The office also predicted that the deficit will continuously increase every year through 2023. It will also boost the national debt by 2029 and could reach its highest level. The increasing levels of red ink stem from a steep falloff in federal revenue after Trump’s 2017 tax cuts. It lowered individual and corporate tax rates. Tax revenues for 2018 and 2019 have decreased at least 430 billion U.S dollars short of what the budget office predicted they will be in June 2017.

It is noteworthy that the budget deficit shrinks when unemployment is low. But, it is continuously increasing in spite of the longest economic expansion on record and the lowest jobless rate during the last 50 years. On Wednesday, Trump backed away from both ideas in comments to reporters. He said it is unclear if the new deficit figures played any role in that reversal. Trump also needs to make permanent many of the temporary individual tax cuts contained in the 2017 law, which are scheduled to expire in 2025. The Congressional Republicans have largely gone along with Trump’s moves to add more debt. They insist that it will return to shrinking the deficit if he wins a second term in office.