The federal deficit will reach at least $1 trillion during the current fiscal year and that's a significant amount, but the deficit will jump by an even larger amount in fiscal 2021.
The Congressional Budget Office (CBO) had previously estimated that the federal deficit would stabilize and average about $1 trillion over the next 10 years but, for the first time that I can recall, the CBO is projecting that the deficit will stabilize around $1.3 trillion over the next 10 years.
After passing that mark this year, the deficit is expected to average $1.3 trillion between 2021-30, rising from 4.6% of GDP to 5.4% over the period. That’s well above the long-term average since around the end of World War II. The deficit since then has not topped 4% of GDP for more than five consecutive years, averaging just 1.5% over the period.
As part of a spending pattern that the CBO deemed unsustainable, the national debt is expected to hit $31.4 trillion by 2030.
Tuesday’s projections reflect a slight increase from the estimates presented in August 2019.
If there's a good reason to think the deficit will stop growing at $1.3 trillion, I haven't seen it.
The looming disasters and colossal messes that the next president will have to clean up after Trump is gone are one reason among many that I cannot personally get too excited about candidates promising to immediately throw trillion of dollars at all of our various problems simultaneously.
I don't necessarily disagree with those proposals nor do I disagree that we need to tackle big problems, but I also think they under-appreciate just how crippled and disheveled the federal government is going to be. The Trump regime has hallowed out the federal government over the last several years while also creating messes in almost every foreign country the next president will also have to clean up.
It will be a tremendous lift for the next administration and session of Congress to repeal Trump's tax cuts or replace them just to make up for fiscal ground we've already lost. Anything beyond that does not strike me as very realistic.
Keep in mind that ending Trump's trade war could also add almost $100 billion to the deficit as that's close to the amount the Treasury is receiving in import duties which totaled over $80 billion last year.