Kudlow claims rising deficit is coming down

President TrumpDonald John TrumpSenate GOP budget ignores Trump, cuts defense Trump says he'll nominate Stephen Moore to Fed White House: ISIS territory in Syria has been 100 percent eliminated MORE's top economic adviser, Larry Kudlow, on Friday said the federal deficit is falling, even though the latest data shows it is growing since the tax-cut law went into effect.

“As the economy gears up, more people working, better jobs and careers, those revenues come rolling in and the deficit, which was one of the other criticisms, is coming down,” Kudlow said in an interview with Fox Business. “And it's coming down rapidly. Growth solves a lot of problems.”

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In a report released earlier this month, the nonpartisan Congressional Budget Office (CBO) said the federal deficit had expended by $97 billion this year compared to last year.

Government spending surged 6 percent relative to last year, the CBO said, while revenues only increased 3 percent.

In a separate report this week on the 30-year budgetary outlook, the CBO projected a massive increase in deficits. The national debt was projected to double by 2048, far surpassing the highest historical debt burden in U.S. history.

It’s not clear if Kudlow was referring to other data. The Hill did not immediately receive comment from the White House or Treasury Department.

The administration has repeatedly argued that the tax-cut law will increase spending by businesses and consumers and create jobs, leading to significant economic growth that will cut into the deficit.

“A lot of our critics said you can’t beat 2 percent. We're now beating 3 percent,” Kudlow said Friday.

First quarter growth this year was revised down to 2 percent according to Commerce Department data released on Thursday, though there are projections for growth above 5 percent in the second quarter.

The unemployment rate stands at 3.8 percent, the lowest in nearly 20 years, and monthly jobs reports have showed an economy gaining employment.

There are also questions, however, about how long growth of even 3 percent can be sustained, with some economists arguing a temporary “sugar rush” from the tax law and increased spending will goose the economy, but only for a short time. 

The CBO expects growth to pick up this year before returning to a lower rate.

“CBO anticipates that recent changes to the tax code, changes in discretionary spending, and continuing increases in aggregate demand will spur a pickup in the growth of real [gross domestic product] over the next few years,” the 30-year projection said. Growth fueled from the tax cuts would peak in 2022, it projected.

“Thereafter, growth in real GDP is projected to make a transition to a pace that reflects the increases in the supply of labor, capital services, and productivity," the report said, indicating that the fiscal push would not change long-term fundamentals about the economy.

On average, the CBO projected that the economy would grow at an average of 1.9 percent a year for the next decade.

The CBO expects growth to pick up this year before returning to a lower rate.

Kudlow, a former CNBC commentator and opinion contributor for The Hill, took over as director of the White House National Economic Council earlier this year. Earlier this month, he suffered what was described as a very mild heart attack.