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Trump's budget could reduce deficits, just not as much as he claims

Posted July 13

When President Trump released his 2018 budget proposals -- marked by trillions in spending cuts -- the White House claimed it would balance the budget in a decade.

A new analysis from the nonpartisan Congressional Budget Office didn't exactly come to that conclusion. Instead, it estimates that Trump's budget would reduce deficits by a third over the next decade relative to where they would be otherwise.

Under the president's blueprint, annual deficits would range between 2.6% and 3.3% of GDP, down from 3.6% this year, the CBO projects.

Related: 20% of taxpayers could pay more under Trump tax reformxxx

CBO's conclusion differs from the White House's largely because the CBO -- and most economists -- project slower economic growth than the administration assumes.

Trump's team believes his policies -- huge tax cuts and spending cuts -- would produce sustained annual growth of 3%.

But under current law, the CBO expects economic growth to be about 1.8% on average over the next decade. Trump's proposals, it estimates, could add a tenth of a percentage point to that projection. But it doesn't factor in Trump's tax cuts, since not enough information has been provided.

Related: Trump's first budget: Trillions in cuts

In fact, a number of Trump's plans lacked sufficient detail for the CBO to calculate budgetary costs and savings. So in some cases, it used the White House's estimates. But for others -- like tax reform -- it assumed neither any costs nor savings.

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