The Congressional Budget Office estimates President Donald Trump's budget proposal would shrink deficits by nearly a third over the coming decade, but not nearly as much as the White House projects.
Under the Trump budget, the federal deficit would total $720 billion by 2027, compared with a $16 billion surplus estimated by the White House, the CBO said in an analysis of the president's budget released Thursday.
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The deficit could fall to between 2.6% and 3.3% of gross domestic product over the next 10 years, the CBO said. The report also estimates that debt held by the public would total 80% of GDP by 2027, 11 percentage points below the CBO's projection under current policy, due in large part to significant proposed cuts to government spending.
But its estimates of the deficit are larger than the White House's estimates in every year over the next decade, primarily because the administration assumes the budget will generate much higher revenues, stemming from faster economic growth than the CBO assumes. The CBO said it also didn't have enough information about many of the president's economic policy proposals to calculate their effects on the budget.
"The president's proposals would affect the economy in a variety of ways; however, because the details on many of the proposed policies are not available at this time, CBO cannot provide an analysis of all their macroeconomic effects or of the budgetary feedback that would result from those effects," the report said.
In some cases, the CBO and the Joint Committee on Taxation relied on administration cost-saving estimates for policy proposals that it deemed "achievable targets." But in other cases when proposals lacked specificity, including a plan to save $139 billion by reducing improper government payments and $35 billion by easing financial regulations, the CBO and JCT didn't count the potential savings in their estimates.
The CBO also said the White House proposal for tax overhaul "lacked the specificity necessary to evaluate any (economic) effects from such a change." For that reason, the report used the administration's estimate that the proposal would have no net budgetary effect.
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(END) Dow Jones Newswires
July 13, 2017 12:30 ET (16:30 GMT)