WASHINGTON — The U.S. government’s annual budget deficit is set to grow to $1 trillion in 2020 and record levels afterward, part of a gloomy economic outlook from the nonpartisan Congressional Budget Office.

The report comes amid military spending increases to counter Russia and China, raising the question of how those increases are compatible with the 6-month-old GOP tax cuts and the huge deficits they’re expected to spawn.

The military will be “hurt,” the House Armed Services Committee’s top Democrat, Rep. Adam Smith, said Tuesday, adding that the nation’s combination of tax cuts and spending increases leave the U.S. ill-equipped to economically compete with China and other major powers.

“President Trump and the Republicans’ extremely reckless tax cuts, combined with our ongoing unwillingness to make strategic choices about how we spend our defense dollars, will end up forcing unpleasant national security trade-offs at precisely the time we are expecting increased strategic competition,” said Smith, of Washington.

“We are constantly told that we need to do everything we can to prepare for these challenges. But instead Congress has put us in a massive hole, and those deficits will hurt the military at a time when it is most problematic,” he added.

Smith has previously warned Defense Secretary Jim Mattis that the Pentagon’s two-year budget deal may be as good as it gets.

According to the CBO, the U.S. is at a heightened risk for another financial crisis, as debt ultimately peaks at more than 152 percent of the nation’s gross domestic product. At 78 percent of GDP, federal debt held by the public at present is at its highest level since shortly after World War II.

Republicans have credited the tax cuts and Trump-initiated deregulation with creating economic growth. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, acknowledged that sustained growth will be needed to overcome projected deficits, coupled with reductions of controversial entitlement programs.

“If you believe that the tax cuts are supposed to pay for themselves as long as the economy is averaging over 2.8 percent, it’s paying for itself,” Hensarling told the Fox Business Network last week. “Increased revenue is part of the deficit solution. Ultimately, we have to reform current entitlement programs for future generations.”

Still, the CBO projects that revenues will be flat until 2026, when the individual income tax rates in the tax bill expire.

The country’s aging population and rising health care costs are driving government spending for major social safety-net programs — another source of budget pressure, according to the CBO.

When outstanding debt is relatively small, the federal government is able to borrow money at lower rates to cover unexpected costs, like those that arise from recessions, financial crises, natural disasters or wars.

But when outstanding debt is large, the government has less flexibility to address financial and economic crises. A large debt also can compromise a country’s national security by constraining military spending in times of international crisis or by limiting the government’s ability to prepare for — or respond to — such a crisis, the report notes.

Joe Gould was the senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry. He had previously served as Congress reporter.

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