A top White House economic adviser says the ballooning budget deficit ‘doesn’t bother’ him

AP/Evan Vucci

White House economic adviser Larry Kudlow suggested on Thursday that the rapidly growing gap between federal income and spending wasn’t a pressing concern.
"I don’t think we’re at a crisis point now," Kudlow said of publicly-held debt as a share of gross domestic product. "That by itself is not a catastrophe. It doesn’t bother me right now."
As a candidate in 2016, President Donald Trump promised to balance the federal budget within eight years.

White House economic adviser Larry Kudlow suggested on Thursday that the rapidly growing gap between federal income and spending wasn’t a pressing concern.

"I don’t think we’re at a crisis point now," Kudlow said of the deficit at a Peterson Institute of International Economics event in Washington, DC, estimating that publicly-held debt as a share of gross domestic product was around 90%.

"That by itself is not a catastrophe. It doesn’t bother me right now."

Kudlow said that he would be concerned if there were a longer-term trend of mediocre growth and new entitlement programs.

As a candidate in 2016, President Donald Trump promised to balance the federal budget within eight years. But the deficit has climbed steadily since he took office, despite a humming economy.

The White House has projected that growth will come in at or above 3% in throughout Trump’s presidency. Kudlow said he believed that would happen even if the US and China fail to resolve a trade war that has cast uncertainty on the world’s largest economies.

"I hope he is right but it seems much more optimistic than private sector forecasters at this point," said Austan Goolsbee, the chairman of the Council of Economic Advisers in the Obama White House.

The widening deficit has been in part driven by a sweeping tax-cut bill passed in 2017, which the nonpartisan Congressional Budget Office estimated will add $1.9 trillion to the national debt over the next decade. Republicans had promised the legislation would pay for itself through higher levels of growth, but evidence suggests otherwise.

On Wednesday, data from the Treasury Department showed the deficit grew 42% from a year earlier to $207.8 billion in May. Since the fiscal year began in October, that gap has increased by about 39%.

Kudlow has downplayed the size of the budget deficit before, even falsely claiming at one point last year that it was "rapidly" declining under Trump. The annual deficit is expected to come in at around $1 trillion by 2022 and remain above that level annually for at least seven years, according to the CBO.

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Source: Business Insider – gheeb@businessinsider.com (Gina Heeb)