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The federal deficit is projected to be over $1 trillion each year for the next 10 years according to the Office of Management and Budget (OMB) in its annual Mid-Session Review (MSR) released last week. The report, which takes into account the Administration’s economic forecast and assumes the President’s legislative agenda is enacted, expects the current fiscal year to end with a deficit of $1 trillion.
According to the Administration’s calculations, the President’s proposed policies would reduce the deficit by $2.6 trillion over the next decade, mostly through changes to tax policies. About half of that reduction would result from raising the corporate tax rate from 21 percent to 28 percent. Proposals targeting high-income taxpayers is estimated to increase revenues by another $0.7 trillion over the upcoming 10 years.
Among the economic variables that most directly affect budget projections:
The Mid-Session Review indicates that the federal budget remains on an unsustainable fiscal path due to a structural mismatch between spending and revenues. Although the Administration proposes some deficit reduction, such policies would still leave high and rising deficits in the future. Moving forward, lawmakers should consider more ways to reduce the deficit and put America on a better fiscal path.
Related: Debt vs. Deficits: What's the Difference?
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