Spending deal to add $1.7 trillion to deficit: CBO

A sweeping budget deal passed earlier this month to raise spending caps in 2020 and 2021 will add $1.7 trillion to the U.S. deficit over a decade, according to a new analysis from the Congressional Budget Office (CBO).

The CBO estimates that while the bipartisan deal increased spending for next year by about 3 percent over current levels, or $50 billion, the cap is 15 percent higher than the roughly $125 billion in budget cuts that were scheduled to go into effect.

That projection was the result of the CBO comparing the new spending path over a decade to the scheduled cuts. Last year, the CBO also estimated what the deficit would look like if there were no scheduled cuts and spending only rose with inflation. When compared to that estimate, the spending deal didn’t make a dent.{mosads}

President Trump signed the bipartisan budget deal earlier this month after it passed Congress before the monthlong August recess. Lawmakers voted for the deal over concerns from fiscal hawks that it would substantially add to the deficit.

The overall projected increase to the deficit is on a similar scale to the $1.9 trillion in estimated deficits associated with the GOP tax law that was enacted in late 2017, according to CBO analyses.

Still, the figure is likely to fuel an ongoing debate about soaring deficits, which the CBO projects will near $1 trillion this year, and amount to $12.2 trillion over the next decade. The main drivers of the deficits are mandatory spending programs such as Social Security, Medicare and Medicaid.

When added to the $22 trillion debt the U.S. has already accrued, that puts the U.S. on a fiscal path that CBO Director Phillip Swagel says is “unsustainable.”

“Federal Debt, which is already high by historical standards, is on an unsustainable course, projected to rise even higher after 2029 because of the aging of the population, growth in per capita spending on health care, and rising interest costs,” he said.

“To put it on a sustainable course, lawmakers will have to make significant changes to tax and spending policies—making revenues larger than they would be under current law, reducing spending below projected amounts, or adopting some combination of those approaches,” he added.

Fiscal hawks also decried the deal’s deficit effects.

“We all know we are already on a troubling fiscal path, but today’s CBO report shows us that our leaders are making things considerably worse,” said Michael A. Peterson, CEO of the Peter G. Peterson Foundation, a fiscal advocacy group.

“As we borrow more from tomorrow to pay for today, interest will consume a larger and larger part of the budget, limiting our options and threatening economic opportunities for the next generation,” he added.