Topline: The Congressional Budget Office projects that the federal government will have a budget deficit of $1.9 trillion this year, $400 billion more than was projected in February.
Key facts: The CBO named four factors that contributed to the $400 billion increase.
Since February, President Biden’s administration has made or proposed changes to its student loan forgiveness policy that the CBO estimates will cost the federal government an extra $145 billion. If Biden’s plan from April to expand loan forgiveness is enacted, that projection rises to $211 billion; it falls to $79 billion if not.
The Federal Deposit Insurance Corporation is also taking longer than expected to get back the money it loaned to avert bank failures last year, adding $70 billion to the deficit.
New laws passed since February added another $60 billion in expenditures, and projected Medicaid spending has risen by $50 billion.
The CBO now expects the total federal deficit over the next 10 years to be $22.1 trillion. That’s an average of $2.2 trillion per year; the deficit has only ever been that high during the pandemic in 2020 and 2021. The deficit was $1.7 trillion last year.
Each year that the federal budget sits at a deficit — meaning the government spent more money than it earned — increases our national debt, which currently sits at $34.7 trillion.
That means interest payments on the debt are also expected to reach historic highs. Every year from 2025 to 2034, the CBO expects the U.S. to spend at least 3.4% of its gross domestic product on interest. That hasn’t happened in any year since at least 1940.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
Background: The CBO says more than half of the projected increase in federal spending over the next decade will go toward Social Security and health programs like Medicare and Medicaid, which will take up 68% of the federal budget by 2034 unless changes are made.
OpenTheBooks’ previous analysis of government projections for these programs revealed an even darker long-term forecast: Social Security and Medicare will be depleted by 2041 and eventually be underfunded by $175.3 trillion under current policy.
Few, if any, current politicians are willing to take on the publicly-toxic challenge of reducing future Social Security benefits, but that may soon be inevitable.
Summary: The time is now for our federal government to curb spending and get serious about retaking control of our economic future.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
We're proud to make our journalism accessible to everyone, but producing high-quality investigative pieces still comes at a cost.
That's why we need your help. By making a contribution today, you'll be supporting RealClearInvestigations and ensuring that we can keep providing in-depth reporting that holds the powerful accountable.
Donate now and help us continue to publish distinctive journalism that makes a difference. Thank you for your support!
Support RealClearInvestigations →
