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The Federal Budget Deficit in June Was Bigger Than the Entire Federal Budget Deficit for 2018

Added 07-13-20 05:21:02pm EST - “Remember when $1 trillion annual deficits were worryingly large? Last month's budget gap was $864 billion.” - Reason.com

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Posted By TheNewsCommenter: From Reason.com: “The Federal Budget Deficit in June Was Bigger Than the Entire Federal Budget Deficit for 2018”. Below is an excerpt from the article.

In January 2019, the Congressional Budget Office (CBO) published one of its recurring looks at America's likely budget and economic trajectory over the coming decade. These reports are useful for showing not just the current state of the fisc, but where nonpartisan government analysts think it will go and what might occur as a result. They offer both an of-the-moment snapshot and a rough sense of what to expect.

What the CBO said at the time was that the country's debt and deficits were on a risky, perhaps even dangerous, track.

The annual budget deficit—the gap between government spending and tax revenues—would run about $900 billion in 2019, and it would push beyond $1 trillion every year starting in 2022. Debt as a percentage of the country's total economy would rise steadily, reaching 93 percent of GDP by 2029, the highest level since the years directly following World War II.

Automatic spending on major entitlements would keep government spending high and make reductions difficult. Interest payments on the nation's rising debt would become one of the country's largest spending categories. The persistently high levels of debt and deficits, meanwhile, would serve as a drag on economic growth. Overall debt levels were on track to reach the highest levels in the nation's history. 

All of this was reason to worry. "Such high and rising debt would have significant negative consequences, both for the economy and for the federal budget," the report warned, with reduced national productivity and total wages plus an increased likelihood of a fiscal crisis. In an emergency scenario, policymakers might be more constrained from responding in the most effective way. Debt and deficits were a modest burden on the economy in good times. And the higher they ran, the more economic risk accumulated. 

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