WASHINGTON – This year’s federal deficit will drop to $559 billion, down from a deficit of $587 billion in fiscal 2016, but will explode to $1.4 trillion a year by 2027, the head of the Congressional Budget Office said Thursday.

The deficits are expected to grow above 3% of GDP after 2019, in part because of an insufficient labor force associated with retiring baby boomers, and the continued growth in spending, CBO Director Keith Hall told the House Budget Committee.

The nonpartisan office based its projections on the assumption on current laws remaining in place; the agency does not speculate on the effect of proposed legislation on the deficit.

Democrats on the committee argued that immigrants would help the labor market, citing a CBO report in 2015 that said an inclusive U.S. immigration policy would have a net positive impact on the federal budget.

Hall said the actual result of immigration reform will vary from different proposals and on whether the U.S. attracts more skilled workers than unskilled workers.

“It [immigration]does affect labor supply, and that labor supply does help GDP grow,” Hall said.

President Donald Trump signed an executive order last week that severely restricts immigration from seven Muslim countries, suspends all refugee admission for 120 days, and bars all Syrian refugees indefinitely; another executive order says the U.S. will build a wall or fence between the U.S. and Mexico.

Business leaders, including from Apple, Amazon, and Starbucks have opposed Trump’s immigration orders.

Hall said it is hard to know how many people are going to be affected by the executive order but, for now, “it won’t change our forecast.”

The Republicans at the hearing, on the other hand, focused on the spending under the Affordable Care Act and how it affects deficits.

Although the CBO agreed in the report that Social Security and health care costs account for nearly all the increase of outlays for mandatory programs, it suggested earlier this month that repealing the ACA could cost the government $350 billion over 10 years.


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