WASHINGTON (AP) — The Congressional Budget Office said Tuesday it expects a $400 billion, or 27%, increase in the federal budget deficit this year, compared with the last budget outlook released in February.
The main drivers of the change are the higher costs of the additional spending package signed in April that provides military aid to Ukraine and Israel; higher than estimated costs for reducing student loan balances; increased Medicaid spending; and increased spending on FDIC insurance after the agency has yet to recover payments it made after the 2023 and 2024 banking crises.
The report also predicts that the country’s public debt will rise from 99% of gross domestic product at the end of 2024 to 122% of GDP – the highest level on record – by the end of 2034. “Then the debt will continue to rise. ,” the report said.
Deficits will be a problem for lawmakers in coming years because of the burden of servicing the entire debt burden, an aging population that drives up the overall cost of Social Security and Medicare, and rising health care spending.
The report addresses President Joe Biden’s claim that he cut deficits because borrowing increased in 2023 and is expected to rise again this year.
The White House budget proposal released in March claims to reduce the budget deficit by roughly $3 trillion over the next decade and increase tax revenues by a total of $4.9 trillion over the same period.
White House spokeswoman Karine Jean-Pierre said after the report’s release that “the president will do everything he can when it comes to reducing the budget deficit,” adding that former President Trump “has not signed legislation to reduce budget deficits.” the shortage.”
Former President Donald Trump, as a candidate for president in 2024, recently told a group of CEOs that, among other things, he would further reduce the corporate taxes he had cut while in office. The Committee for a Responsible Federal budget estimates that the 10-year cost of the legislation and executive actions President Trump signed into law was approximately $8.4 trillion, including interest.
Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said the CBO projections show that the outlook for America’s critical national debt problem is worsening.
“The damaging effects of higher interest rates, which fuel higher interest costs on a massive existing debt burden, continue and lead to additional borrowing. It is the definition of unsustainable,” said Peterson.
“The leaders we elect this fall will face a series of very consequential budget deadlines next year, including restoring the debt limit, the expiration of the 2017 tax cuts and key decisions on health care subsidies, discretionary spending caps and more.”
