The federal deficit will surpass $1 trillion in 2022, two years later than previously projected, according to a new report by the Congressional Budget Office.
Previous CBO outlooks projected that the deficit would surpass $1 trillion by 2020, but a reduction in emergency spending on disasters such as hurricanes in 2018 lowered the outlook. The central factors driving growing deficits, however, showed no signs of slowing.
In 2019, the federal deficits is projected to grow 15 percent to $897 billion in 2019. The main drivers of the deficit are mandatory spending programs such as social security, medicare and medicaid, in addition to discretionary spending approved by congress and reduced revenues stemming from the GOP tax cut.
Deficits will amount to 4.4 percent on average every year over the next decade, far higher than the 1.8 percent average growth rate CBO projects. The spike in spending and tax cuts under President Trump were out of sync with typical economic policy, CBO noted.
“That average deficit is not only large but also unusual for times of low unemployment,” CBO director Keith Hall said in a prepared statement.
Deficits are expected to rise significantly over time as the baby boomer generation retires and increasingly relies on mandatory programs, and interest rates continue to rise.
Interest costs will be exacerbated by the increasing level of debt that the U.S. owes. The overall debt burden is projected to grow from the current 78 percent of GDP to 93 percent in ten years, and reach 150 percent in 50 years.