Federal budget deficit expected to soar to $2.7 trillion in 2035, highlighting pressure on GOP

As congressional Republicans struggle to keep deficits in check while extending their sweeping 2017 tax cuts, the Congressional Budget Office provided a dour forecast.

As congressional Republicans struggle to keep deficits in check while extending their sweeping 2017 tax cuts, the Congressional Budget Office provided a dour forecast. Even if those tax breaks are allowed to lapse at year’s end, the federal budget deficit will still climb to $2.7 trillion in a decade, according to the CBO’s latest outlook, released Friday. That projection takes into account a boost in individual income tax revenue starting in 2026, though the impact will be “relatively modest,” CBO Director Phillip Swagel told reporters Friday. Spending on Social Security, Medicare and interest payments, however, will grow faster than revenues, further widening the deficit. Fueled by rising debt levels, interest costs are expected to surpass defense spending for the next decade. In 2035, the adjusted deficit will equal 6.1% of the nation’s gross domestic product, or GDP, far higher than the 3.8% average of the past 50 years. The deficits are notably large considering the forecasts for relatively low unemployment rates in coming years, Swagel noted. Meanwhile, in 2029, the federal debt is expected to surpass its record high of 106% of GDP in 1946. It’s projected to be 100% of GDP this year and hit 118% in 2035. The projections reinforce the difficult task that lies ahead for President-elect Donald Trump and Republicans, who took full control of Capitol Hill this year with a big agenda in mind. Among their top priorities is extending the expiring Tax Cuts and Jobs Act provisions, which would add an estimated $4.6 trillion to the deficit over 10 years.