Congressional analysts Tuesday projected that President Donald Trump has inherited a stable economy and a government that is on track to run a $559 billion budget deficit for the ongoing budget year.
The new estimates from the nonpartisan Congressional Budget Office say the economy will hold relatively steady, with economic growth rising slightly to 2.3 percent this year and unemployment averaging less than 5 percent for the duration of Trump’s term.
Trump is promising higher growth as his administration curbs regulations, overhauls the tax code, and repeals the Affordable Care Act, former President Barack Obama’s signature accomplishment.
The latest CBO figures are in line with previous projections. The deficit continues to be intractable and CBO continues to warn that rising deficits and debt “would have significant consequences” and act as a drag on the economy if left unchecked.
“After declining for several years, federal budget deficits are on a path to rise during the next decade,” the report says.
The projections come as Trump and Republicans controlling Congress are working to repeal much of former President Barack Obama’s signature health care law, boost the Pentagon budget, and reform the loophole cluttered tax code.
Balancing the budget would require crunching cuts to domestic agencies and big health programs like Medicare.
Trump’s nominee to run the White House Budget office, Rep. Mick Mulvaney, R-S.C., was testifying before the Senate Budget Committee Tuesday morning. His prepared remarks offer few clues about the direction the new administration will take in tackling the deficit.
Obama inherited an economy in recession and deficits exceeding $1 trillion a year. Deficits moved lower over his two terms, registering $587 billion last year.
Economists generally prefer to measure the deficit against the size of the economy. By that gauge, the current-year deficit would register 2.9 percent of gross domestic product, a level that many economists say is sustainable, at least in the short term. But deficits would gradually rise as a percentage of GDP, which CBO warns could provoke a debt crisis in coming years and limit the options of policymakers to respond to unanticipated challenges.