Federal Deficit to Soar in 2016 After Ryan-Obama Tax Deal

The tax-cut deal inked by President Obama and House Speaker Paul D. Ryan last month has put a major dent in the federal budget, helping send the deficit soaring by 24 percent, the Congressional Budget Office said Tuesday.

The $544 billion deficit projected for 2016 marks the first year since 2009 that the red ink has grown, and it powers the deficit back up over the half-trillion mark, where it had been for most of Mr. Obama’s tenure.

CBO projections contained some good news, with the economy showing signs of solid growth in 2016 and 2017, finally overcoming some of the “slack” that built up during the 2008 Wall Street collapse and the Great Recession. Analysts said more people will be enticed back into the labor force, but inflation and interest rates will also rise as the economy ticks along.

But spending and taxes remain the biggest problem for the budget, with the twin deals at the end of last year to break the sequester budget caps that had held spending in check, and to extend a series of special interest tax breaks.

Combined, they meant the government needed more money than ever — but had less flowing in. (Read more from “Federal Deficit to Soar in 2016 After Ryan-Obama Tax Deal” HERE)

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