WASHINGTON - The White House says worsening tax revenues will cause the budget deficit to jump to $702 billion this year. That's a $99 billion spike from what was predicted less than two months ago.
The report from the Office of Management and Budget comes on the heels of a rival Congressional Budget Office analysis that scuttled White House claims that its May budget, if implemented to the letter, would balance the federal ledger within 10 years. The OMB report doesn't repeat that claim and instead provides just two years of updated projections.
The White House budget office also says the deficit for the 2018 budget year that starts on Oct. 1 will increase by $149 billion to $589 billion. But lawmakers are already working on spending bills that promise to boost that number even higher by adding to Trump's Pentagon proposal and ignoring many of Trump's cuts to domestic programs.
Last year's deficit registered $585 billion.
The White House kept the report to a bare-bones minimum and cast blame on “the failed policies of the previous administration.”
“The rising near-term deficits underscore the critical need to restore fiscal discipline to the nation's finances,” said White House budget director Mick Mulvaney. “Our nation must make substantial changes to the policies and spending priorities of the previous administration if our citizens are to be safe and prosperous in the future.”
In late May, Trump released a budget plan proposing jarring cuts to domestic programs and promising to balance the budget within a decade. But it relied on rosy predictions of economic growth to promise a slight surplus in 2027. Trump's budget, however, left alone Social Security retirement benefits and Medicare, though House Republicans are poised next week to again propose cutting Medicare as they unveil their nonbinding budget outline.
CBO says that Trump relied on far too optimistic predictions of economic growth and that Trump's rosy projections are the chief reason his budget doesn't balance as promised.
Trump's budget predicts that the U.S. economy will soon ramp up to annual growth in gross domestic product of 3 percent; CBO's long-term projections predict annual GDP growth averaging 1.9 percent.