The U.S. Congressional Budget Office’s yearly look at the government’s economic picture warns that the Trump tax cuts are increasing deficit spending and raising the risk of a financial crisis, according to a report by the Los Angeles Times.
Within less than two decades, the CBO projects the federal deficit will be the largest in U.S. history, with debt peaking at more than 152 percent of the nation’s gross national product.
“The prospect of large and growing debt poses substantial risks for the nation and presents policy makers with significant challenges,” said CBO director Keith Hall, in a statement.
Currently, the federal debt is at about $15 trillion, or 78 percent the size of the U.S. economy. The GOP tax cut is expected to add $2.3 trillion to the deficit over the next ten years. Adding to the problem are the ever-increasing costs of social security and subsidized health care.
Skyrocketing debt levels can have serious consequences for the U.S., the budget office says. They threaten to reduce the income of average Americans and undermine the nation’s global power as the Treasury increasingly relies on foreign investors to lend money to the government.
Rising debt levels also reduce lawmakers’ flexibility in responding to a recession, the CBO warns.
“If another recession or fiscal crisis occurred and federal debt was at its current level or higher, the government might have a more difficult time implementing similar costly actions in response.”