Economy to surge, unemployment to hit record low under Trump

President Trump has overseen a dramatic worsening of the government’s finances in his first 14 months in office, sending deficits soaring to more than $800 billion this year topping $1 trillion by 2020, and staying there every year for the foreseeable future, the Congressional Budget Office said Monday.

Last year’s tax cuts will sap the government of money, even as the budget and spending deals approved this year will push the government to spend more money — cash it will have to borrow.

That will quickly push deficits back to the levels they were during the Obama administration, when the government was recovering from the Great Recession.

As those yearly deficits pile up, the debt will deepen dramatically. Within a decade the debt held by the public will total $28.7 trillion, flirting with rates nearly 100 percent of the economy, as measured by gross domestic product, the CBO said.

That would be the highest rate since 1946, which marked the end of war-era borrowing, and it would be twice the average debt the government has held over the last 50 years.

The CBO warned of serious consequences: “The likelihood of a fiscal crisis in the United States would increase,” the analysts said, repeating a warning that’s done little to change the behavior of lawmakers.

In fact, things have gotten worse since the CBO’s last warning in June.

The tax cuts will siphon $1.7 trillion off government revenue over the next decade, and spending will increase by slightly more than $1 trillion. The economic will grow faster, however, adding $1 trillion in revenue, for a net total new deficit of $1.6 trillion.

As the economy heats, GDP will grow 3.3 percent this year, up substantially from the 2 percent projection of last year.

Unemployment rates will also fall deeper than their already low levels, hitting a low of 3.3 percent next year. That would be a record for the post-World War II era.

But rising interest rates will soon sap some of that surge, the analysts said. By 2020 — just as Mr. Trump is facing voters for re-election — GDP growth will have slipped back below 2 percent.

The short-term boost comes at a significant price: The government will run a deficit of $804 billion this year, which is much bigger than last year’s $665 billion tally. But for shifts in timing of payments, the deficit would have been even worse, at $848 billion, which would have been a one-year surge of 28 percent.