Budget Deficit Revised Upward by $100 Billion
Thanks to declining tax revenues, the Office of Management and Budget projected the 2017 budget deficit to top $700 billion. That's almost $100 billion higher than they projected in May.
OMB also projects the combined budget deficit for Trump's first two years in office will be nearly $250 billion more than anticipated.
In a mid-year update to Congress, Mulvaney, director of the Office of Management and Budget, revised the estimates supplied in late May when the Trump administration submitted its first spending plan.
Since then, Mulvaney said, the deficit projected for the current fiscal year has increased by $99 billion, or 16.4 percent, to $702 billion. For 2018, the deficit will be $149 billion more than first expected, increasing by 33 percent to $589 billion.
The figures come as the administration is facing widespread doubts among economists and analysts that it can erase government deficits largely by boosting economic growth and changing laws like the Affordable Care Act. ACA reform is facing a difficult path in Congress, and the Congressional Budget Office on Thursday said the administration's growth and deficit reduction plans were optimistic.
The letter from Mulvaney said the bulk of the problem this year and next stems from lower-than-expected tax collections.
Individual and corporate income taxes and other collections for this year are expected to be $116 billion less than the administration anticipated in May. Tax receipts in 2018 are expected to be $140 billion less than initially estimated.
Spending in 2017 will be $17 billion less than expected -- and would have been even lower if not for the use of "erroneous outlay rates" used in estimating costs of health programs for the U.S. military, Mulvaney said in a letter to House of Representatives Speaker Paul Ryan.
Costs for the defense health program will be $19 billion higher in 2017 and $9 billion higher in 2018 than initially expected. Overall spending in 2018 will rise by $10 billion Mulvaney said.
The estimates are based on existing law and do not include any proposed changes to health, welfare or other programs.
The good news is that if the GOP can pass a health care reform bill, the deficit will be a little less, which is better than nothing.
The bad news is that we still have a Congress — and since the president proposed the budget, he's no better — that refuses to make the hard choices to bring the budget under control.
Yes, it's hard to reform entitlements, which are only going to add substantially to the budget deficit and national debt over the next decade as Social Security and Medicare run out of money and are forced to draw cash from general revenues.
Democrats are running around the country claiming that "all is well" with entitlements and the GOP only wants to cut them so more people will die. Their irresponsible behavior will only make it that much harder to rein in entitlements when they are already bankrupting the country.
There are quick fixes — raising the eligibility age and raising Social Security taxes. But we've almost run out of ways to kick the can down the road. The problem must be faced. And with the deficit spiraling out of control, neither party appears to have any urgency — or political courage — to do so.