The Congressional Budget Office (CBO) has revealed that the United States’ projected deficit for the 2024 fiscal year has surged to $1.9 trillion, a $400 billion increase from earlier projections in February. The significant rise is attributed to recent actions by the Biden administration and new legislation, as detailed in the CBO’s latest announcement on Tuesday.
Key factors driving this increase include a substantial foreign aid package and initiatives to reduce student loan debt. In April, President Joe Biden signed a $95 billion aid package benefiting Ukraine, Israel, and countries in the Indo-Pacific region, which the CBO incorporated into its revised projections. Additionally, the Biden administration’s student loan forgiveness program has added $66 billion to the deficit, with the potential for this figure to double if the program is fully implemented.
The CBO’s long-term projections are also alarming, with U.S. debt expected to reach $50.7 trillion by the end of 2034, up from $26.2 trillion at the end of 2023. This debt level would equal approximately 122% of America’s GDP by 2034. Such figures have raised concerns among policymakers about the sustainability of current fiscal policies.
Republican Georgia Rep. Mike Collins expressed grave concerns about the new projections, calling them “mind-boggling and civilization-ending numbers” on social media. He emphasized the urgent need for Congress to address the growing annual deficits and national debt.
Other contributors to the increasing deficit include rising Medicaid costs and higher spending on FDIC insurance following banking industry instability in 2023 and 2024. The interest payments on the federal debt are also projected to grow significantly, from $892 billion in 2024 to $1.7 trillion by 2034. Additionally, the U.S. faces an estimated $93.1 trillion in unfunded liabilities for programs like Social Security.
Despite the grim outlook, the White House has defended its fiscal policies. In March, President Biden claimed that his budget would reduce the deficit by $3 trillion over the next decade. He also asserted that his administration had already cut the deficit by over $1 trillion, contrasting this with former President Donald Trump, whom he accused of adding more to the national debt than any other president. However, a USA Today fact check contested Biden’s claims, noting that the national debt grew more under former President Barack Obama in raw dollar terms than under Trump.
As the deficit continues to balloon, the debate over fiscal responsibility and sustainable economic policies is likely to intensify, with significant implications for the country’s financial future.
