Federal budget deficit expected to hit nearly $2 trillion in 2024, according to latest data predict The Congressional Budget Office (CBO) released this week. In February, the agency forecast a deficit of just $1.58 trillion. However, increased spending has led to a projected deficit increase of $400 billion, a staggering 27% increase.
According to the Congressional Budget Office, 80 percent of the deficit surge can be attributed to four sources of government spending.
The largest source of the $145 billion increase was changes in federal student loan programs that resulted in a massive wave of federal student loan forgiveness and future increases in forgiveness.
Second, the CBO report details that “deposit insurance costs increased by approximately $70 billion as the Federal Deposit Insurance Corporation (FDIC) did not recoup its debt to banks in 2023 and 2024 as quickly as CBO had previously anticipated. Amounts paid in bankruptcy.
Third, additional legislation increased costs by $60 billion. Finally, $50 billion in increased spending comes from higher-than-expected Medicaid costs.
The long-term outlook for budget deficits has also increased. In February, the Congressional Budget Office estimated that the deficit would climb to $2.5 trillion by 2034. The latest estimate currently puts the figure at more than $2.8 trillion.
“Between 2025 and 2034, the Congressional Budget Office now projects that if current laws remain largely unchanged, the cumulative deficit will reach $22.1 trillion. This amount is $2.1 trillion more than the $20.0 trillion the agency forecast in February. dollars (i.e. 10%). “Measuring the size of the economy, federal debt is now projected to be equal to 122% of gross domestic product (GDP) at the end of 2034; in February, debt was expected to be equal to 122% of gross domestic product at the end of that year. 116% of GDP.
If the deficit continues to grow as the Congressional Budget Office predicts, the results could be catastrophic.
Cato Institute researchers Romina Boccia and Dominik Lett said: “As debt continues unabated, bond markets may suddenly lose confidence and investors demand higher interest rates, which could trigger a debt doom cycle and a broader fiscal crisis. warn this week. “Congress and the Biden administration should cut spending immediately while the economy is growing and conditions are conducive to deficit reduction, thereby taking pressure off growing interest rates and the federal debt, and before a fiscal crisis forces them to act.”
