Congress recently fired a shot across the bow of the Pentagon. The Defense Department was warned that it better take advantage of the two-year budget boost in defense spending because lean years are coming.
The U.S. now has to grapple with a $21 trillion national debt. Budget deficits are returning to the $1 trillion annual levels.
The top Democrat on the House Armed Services Committee, Rep. Adam Smith (D-Wash.), warned Defense Secretary James Mattis that “While 2018 and 2019 are great, I hope you are also planning for a lean future because we are looking at a trillion-dollar deficit this year.” Smith added that the U.S. national debt is approaching $22 trillion.
Potential Cause of the National Debt
The Congressional Budget Office (CBO) attributes the growth in the budget deficit and the national debt to recently enacted tax cuts and increases in government spending signed into law by President Trump. Analysts believe the new tax package will do little to increase long-term economic growth.
Many people will use this CBO report as evidence that the recent tax reform bill and spending package that Trump signed is proof that the tax cut is the sole cause of the increase in the national debt and the growing federal budget deficit. But one has to also look back to the CBO report of January 2017 to put the new tax bill into context.
CBO Reports Real Cause of Federal Debt
In that report, released just as President Trump took office, The Congressional Budget Office projected that if current laws remained generally unchanged, budget deficits would follow an upward trajectory over the next decade. As a result, there would be a large growth in retirement and healthcare program spending, rising interest payments on the government’s debt, and only modest growth in revenue collections.
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