Ukraine, 'Israel' aid, student debt spikes US 2024 budget deficit
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According to CBO projections, net interest payments on government debt will grow to 3.1% this year and 3.4% in 2025.
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Philip Swagel, director of the Congressional Budget Office testifies during a House Committee hearing on February 14, 2024. (AP)
The nonpartisan Congressional Budget Office (CBO) reported Tuesday that the US national debt is on course to increase by 27% this fiscal year compared to earlier estimates.
The CBO upgraded its predictions and now anticipates the federal budget deficit to be $1.9 trillion in the 2024 fiscal year, rising to about $2.0 trillion when accounting for a shift in the timing of some payments.
CBO Director Phillip Swagel reported this would be nearly $400 billion higher than the CBO's February prediction, leaving the deficit at 7.0% of GDP.
Much of the rise from the February prediction is due to a $145 billion increase in predicted student loan outlays after the Biden administration revised the cost of subsidies and suggested a regulation to minimize student loan balances.
The increase also includes numerous other variables like the increase in $60 billion this fiscal year as a result of newly adopted legislation, such as the security aid package for Ukraine, "Israel", and nations in the Indo-Pacific area, Swagel stated.
According to CBO projections, net interest payments on government debt will grow to 3.1% this year and 3.4% in 2025, representing the highest interest expense in percentage to GDP since records began in 1940.
According to Swagel, the US deficit is expected to reach $24 trillion over the next decade, which is around 70% more than the historical average over the previous 50 years.
As a result, the CBO predicts that government debt owned by the public will climb from 99% this fiscal year to 122% in 2034.
The steep growth in debt, both in absolute terms and as a proportion of GDP, has been slightly mitigated by recent immigration surges.
According to the CBO, net immigration between 2021 and 2026 is predicted to be significantly higher than the historical average of about 200,000 individuals per year, helping to offset the rise in debt.
"The immigration surge is projected to increase the nation's nominal GDP by a total of $8.9 trillion, or 2.4 percent, over the 2024-2034 period," Swagel stated, adding that this would reduce the deficit by almost $900 billion.
