What You Should Know About Our Rapidly Growing National Deficit
The US federal deficit is growing faster than originally estimated. The Congressional Budget Office said last week that the annual deficit will exceed $ 1 trillion in the next fiscal year, which starts in October. Over the next decade, the federal deficit will grow about $ 800 billion more than previously projected, the CBO notes.
If you’ve been following your textbook, Debt Is Bad, then you know that the giant federal deficit isn’t all that much. The current / growing deficit is partly attributable to spending (specifically on defense and Medicare) along with tax cuts in 2017 .
Whenever a deficit occurs, it is added to the national debt, which the Wall Street Journal reminds us is the sum of past and present deficits combined. The last time the deficit exceeded a trillion was in 2012 . The last time we had a surplus was back in 2000-2001.
What scarcity could mean for a downturn economy
“In a good economy, we should see a reduction in the deficit. Instead, we are seeing a growing deficit, and this is good in the economy, but it could change, ” explains Stephanie Rule of NBC News.
The updated deficit data is particularly worrying for economists due to recent discussions about the impending recession, the Washington Post explained. The government will have a “shortage of tools” such as tax cuts or interest rate cuts to resort to, as it did during previous economic downturns. If there are concerns among policymakers about further increases in debt as a nation, then President Trump (or anyone else may find himself in office) may find it harder to push through a stimulus plan like the one we saw about 10 years ago.