In April 2016, then-candidate Donald Trump promised the $19 trillion national debt would be eliminated “over a period of eight years” during an interviewwith the Washington Post.
According to the budget, which is mostly a statement of principles and will likely undergo major revisions in Congress, the annual budget deficit — the difference between how much revenue the government brings in and how much it spends — will reach $1.1 trillion in fiscal years 2019 and 2020.
The US has only run a deficit of $1 trillion or more 4 times, from 2009 to 2012, as the country dealt with the catastrophic effects of the financial crisis.
By contrast, Trump’s budget assumed deficits will rise even with a stronger economy. But the budget also projects a large increase in defense spending, while revenues are expected to come in much lower than previous projections due to the Republican tax reform law — the Tax Cuts and Jobs Act (TCJA).
In 2017’s budget proposal, the White House only projected a deficit of $488 billion in fiscal year 2020. But the projected deficit for 2020 in Monday’s budget is double the 2017 projection due to a $337 billion decrease in the revenue estimate, and a $276 billion increase in the spending estimate.
The deficit assumptions in Trump’s budget do eventually improve. By 2029, the annual deficit drops to $202 billion, but even the improved picture would add debt, contrary to Trump’s promise to pay off that debt.
But according to an analysis by the Committee for a Responsible Federal Budget (CRFB), the deficit reduction relies on a number of rosy assumptions about economic growth and spending cuts.
“The budget assumes real GDP growth will average around 3 percent over the next decade. This is substantially higher than estimates from other mainstream economic forecasters – who project growth rates closer to 2 percent per year over the next decade,” the CRFB analysis said. “Absent these rapid growth assumptions, debt under the President’s budget would likely be about $2 trillion higher by 2029. And debt as a share of GDP would reach roughly 85% to 90%.”
Typically presidential budgets are more positive than other projections, and Trump’s rosy outlook is no different. But, most presidents don’t make a promise to totally wipe out the national debt in eight years.
G. William Hoagland, senior vice president at the Bipartisan Policy Center, said in a statement on Monday that Trump’s budget was not a serious attempt to reduce the deficit and deal with the US debt load.
“Today’s budget release makes clear, however, that curtailing the ballooning deficit is not among the Trump administration’s priorities. It should be,” Hoagland said.
While Trump’s budget is more of a wish list, the deficit projections in the short-term do roughly line up with forecasts from the Congressional Budget Office (CBO).
According to the CBO’s latest budget projections, the annual deficit will hit $903 billion in 2020 and eclipse $1 trillion annually in 2022. In contrast to the president’s budget, the CBO does not expect a decline in the deficit over time and by fiscal year 2029 the projected annual deficit will hit $1.3 trillion.