WASHINGTON (AP) – A government report released Tuesday estimates that this year’s budget deficit will rise to $544 billion, an increase over prior estimates that can be attributed largely to tax cuts and spending increases passed by Congress last month. The deficit and debt picture over the long-term has also worsened considerably.
The estimate from the Congressional Budget Office also sees the economy growing at a slower pace this year than it predicted just a few months ago. It projects the economic growth will slow to 2.7 percent this year; it foresaw 3.0 percent growth in 2016 in last summer’s prediction.
Over the coming decade, CBO predicts deficits totaling $9.4 trillion. That’s up $1.5 trillion from its August estimate, with much of the increase mostly due to last month’s tax legislation, which permanently extended several tax cuts that Congress had typically renewed temporarily. But slower economic growth in coming years and increased spending on veterans benefits and health care for the poor are other major factors.
Last year’s deficit registered $439 billion, the lowest of President Barack Obama’s term in office.
The deficit increase to $544 billion is due to several factors, CBO said, particularly the retroactive extension of tax cuts that had expired at the beginning of last year and additional spending for the Pentagon and domestic agencies that’s a result of last year’s budget deal. A timing shift are large payments is also at work. The current budget year ends Sept. 30.