Story by Zachary Halaschak, Washington Examiner
The federal budget deficit will be nearly $2 trillion in fiscal 2024, the Congressional Budget Office estimated Wednesday.
The $1.9 trillion figure would be an increase from fiscal 2023’s deficit of $1.7 trillion. It is also a significant increase from the congressional scorekeeper’s February forecast that this fiscal year would end in a $1.6 trillion deficit.
The 2024 deficit will equal 7% of the U.S. gross domestic product. That is a large shortfall, by historical standards, for a period in which the country is not at war or in a major recession.
The new data are another reminder of the federal government's precarious fiscal footing going into the next decade.
“Deficits from 2024 to 2034, which total $24 trillion, are about 70% larger than their historical average over the past 50 years when measured in relation to economic output,” CBO Director Phillip Swagel said in a statement. “Both net outlays for interest and primary deficits (which exclude those outlays) are large by historical standards.”
The notable increase in the deficit projection was attributable to several factors, according to the CBO.
There was a $145 billion increase in spending on student loans. That is due to Biden administration revisions to the estimated subsidy costs of previously issued loans and a proposed rule to reduce the balances of many borrowers’ student loans.
Deposit insurance spending projections increased by $70 billion because the Federal Deposit Insurance Corporation is not recovering payments it made to resolve bank failures last year as quickly as the CBO previously anticipated.
The increased headline deficit forecast also now factors in legislation that increased projected discretionary spending by $60 billion. Projected Medicaid spending has also increased by about $50 billion from the congressional scorekeeper’s previous estimate.
The CBO also examined the federal debt, which is set to grow over the next decade. Public debt is predicted to rise from 99% of GDP this year to a whopping 122% of GDP by 2034.
The latest update is yet another warning that the U.S. fiscal situation is on a path that most economists would say is unsustainable.
“With rising interest rates, persistent inflation, and looming trust fund insolvency, there is much more to be done to correct our fiscal path,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said last week.
“The first step is putting a stop to any new borrowing and working together to reduce the deficit,” she added. “Our fiscal house is barreling down an unsustainable path and we must act fast before tomorrow's problems become today’s.”
Republicans and fiscal conservatives have knocked Democrats and the Biden administration for not doing enough to address the deficit and national debt. Some lawmakers from both parties on Capitol Hill have been pushing to address the situation, given looming deadlines to act in the coming years.
The Medicare trust fund will be exhausted in 2036, and the combined Social Security trust fund will become exhausted in 2035, the programs’ trustees projected last month.
In January, the House Budget Committee voted to advance bipartisan legislation that would form a panel consisting of both Republican and Democratic lawmakers from both chambers of Congress, in addition to outside experts.
The committee would work to produce a report and propose legislation that would stabilize the ratio of public debt to GDP to at or below 100% within 10 years.
The federal budget deficit will be nearly $2 trillion in fiscal 2024, the Congressional Budget Office estimated Wednesday.
The $1.9 trillion figure would be an increase from fiscal 2023’s deficit of $1.7 trillion. It is also a significant increase from the congressional scorekeeper’s February forecast that this fiscal year would end in a $1.6 trillion deficit.
The 2024 deficit will equal 7% of the U.S. gross domestic product. That is a large shortfall, by historical standards, for a period in which the country is not at war or in a major recession.
The new data are another reminder of the federal government's precarious fiscal footing going into the next decade.
“Deficits from 2024 to 2034, which total $24 trillion, are about 70% larger than their historical average over the past 50 years when measured in relation to economic output,” CBO Director Phillip Swagel said in a statement. “Both net outlays for interest and primary deficits (which exclude those outlays) are large by historical standards.”
The notable increase in the deficit projection was attributable to several factors, according to the CBO.
There was a $145 billion increase in spending on student loans. That is due to Biden administration revisions to the estimated subsidy costs of previously issued loans and a proposed rule to reduce the balances of many borrowers’ student loans.
Deposit insurance spending projections increased by $70 billion because the Federal Deposit Insurance Corporation is not recovering payments it made to resolve bank failures last year as quickly as the CBO previously anticipated.
The increased headline deficit forecast also now factors in legislation that increased projected discretionary spending by $60 billion. Projected Medicaid spending has also increased by about $50 billion from the congressional scorekeeper’s previous estimate.
The CBO also examined the federal debt, which is set to grow over the next decade. Public debt is predicted to rise from 99% of GDP this year to a whopping 122% of GDP by 2034.
The latest update is yet another warning that the U.S. fiscal situation is on a path that most economists would say is unsustainable.
“With rising interest rates, persistent inflation, and looming trust fund insolvency, there is much more to be done to correct our fiscal path,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said last week.
“The first step is putting a stop to any new borrowing and working together to reduce the deficit,” she added. “Our fiscal house is barreling down an unsustainable path and we must act fast before tomorrow's problems become today’s.”
Republicans and fiscal conservatives have knocked Democrats and the Biden administration for not doing enough to address the deficit and national debt. Some lawmakers from both parties on Capitol Hill have been pushing to address the situation, given looming deadlines to act in the coming years.
The Medicare trust fund will be exhausted in 2036, and the combined Social Security trust fund will become exhausted in 2035, the programs’ trustees projected last month.
In January, the House Budget Committee voted to advance bipartisan legislation that would form a panel consisting of both Republican and Democratic lawmakers from both chambers of Congress, in addition to outside experts.
The committee would work to produce a report and propose legislation that would stabilize the ratio of public debt to GDP to at or below 100% within 10 years.
