The Congressional Budget Office projected a wider deficit for this fiscal year and bigger gaps in the coming years, after lawmakers approved about $680 billion in revived tax breaks over the next 10 years.
The CBO is forecasting a budget gap of $544 billion this year, according to a report released Tuesday in Washington. That compares with a $414 billion deficit projected in August, and the 2015 deficit of $439 billion. The office lowered its 2016 revenue estimate to $3.38 trillion from $3.51 trillion.
“If current laws generally remained unchanged, the deficit would grow over the next 10 years, and by 2026 it would be considerably larger than its average over the past 50 years,” the office said.
Half of the increase in the deficit for the next decade stems from laws enacted since August, and about 30% comes from weaker economic growth and corporate profit estimates, the CBO said.
The CBO forecast shows deficits widening every year in dollar terms, due to the ballooning costs of federal health care and Social Security, and higher interest payments. Larger shortfalls coupled with weak economic expansion make it more challenging for House Republicans to produce a budget resolution that projects a balance over the next decade.
--With assistance from Kasia Klimasinska.
--- Check out Bill Gross: Deficits Plus Demographics Equal Disaster on ThinkAdvisor.