President Trump's top economic adviser said Friday that the federal deficit is “coming down rapidly,” contradicting estimates by nonpartisan analysts, Congress's official scorekeeper and a branch of the White House.
Larry Kudlow, director of the White House's National Economic Council, said on Fox Business that stronger economic growth was creating enough new tax revenue to bring down the deficit.
“The deficit — which was one of the other criticisms [of the GOP tax law] — is coming down, and it's coming down rapidly,” Kudlow said. “It's throwing up enormous amounts of new tax revenue.”
Kudlow clarified to The Washington Post on Friday afternoon that he was referring to his expectations about future deficit levels, not arguing that the deficit had already come down. (The deficit from January through April was $161 billion, according to Treasury, up from $135 billion at the same point last year.)
“The economy is so strong right now it’s going to produce lower deficits. I probably should have said future deficits,” Kudlow said.
But government data and nonpartisan analysts project that deficits will continue to expand, in both the near and long term.
“The federal budget deficit, relative to the size of the economy, would grow substantially over the next several years, stabilize for a few years, and then grow again over the rest of the 30-year period,” the CBO said, projecting that deficits as a percentage of the economy would rise from 3.9 percent in 2018 to 9.5 percent in 2048. The agency projects that on average for the next decade, the deficit would represent 4.9 percent of economic activity.
Commenting specifically on the 2017 tax law, the CBO said it would increase deficits by $1.27 trillion over the next decade, even when including the positive effects of the law on the economy. Annual deficits require the government to borrow money to finance its operations, adding debt. The CBO estimates that the amount of debt the United States will have in a decade will equal almost the total size of the economy.
Official White House data suggest deficits are increasing, too. The White House's Office of Management and Budget says the deficit is rising from $665 billion in 2017 to $832 billion in 2018, and will approach $1 trillion annually in 2019.
“Deficits are not going down. They are going up,” said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, a nonpartisan think tank that advocates for budget discipline.
This post was updated Friday afternoon to include Kudlow’s remarks to The Washington Post.