The federal budget deficit will rise to $693 billion for 2017, the Congressional Budget Office projected Thursday, the biggest deficit in five years and a bigger shortfall than previously estimated partly because of slow incoming tax revenue.
The CBO, the office responsible for providing budget and economic analysis to Congress, said the deficit is likely to increase by $109 billion this year, thanks to the slower revenue intake.
The deficit picture for 2017 has worsened significantly since January, the last time the CBO updated its projections. The shortfall is now expected to be $134 billion than previously thought, thanks to an unexplained slowdown in tax revenue.
And the government’s fiscal outlook for the next 10 years also has been slightly degraded. Over the next decade, total deficits will be $686 billion greater than previously thought, CBO said.
Much of the added deficit can be attributed to the budget office’s expectation of faster rate increases by the Federal Reserve. Higher interest rates mean the government must pay more on its debt.
Only one piece of legislation enacted since January has significantly boosted expected deficits: A defense spending bill President Trump signed in May.
With the new projections released Thursday, the aggregate government shortfall over the next 10 years is estimated to be $10.1 trillion. That will bring the total debt held by the public from $14.4 trillion now to $25.5 trillion by 2027.
Relative to the size of the U.S. economy, the debt will rise from 77 percent to 91.2 percent.
