New Report Says Ukraine Aid, Student Loan Bailouts Will Push Federal Budget Deficit to $2 Trillion This Year
‘This November, America’s fiscal and economic future is on the ballot,’ one observer says.
A troubling report from the Congressional Budget Office is forecasting that this year’s budget deficit will hit $2 trillion, an increase of $408 billion since the CBO’s estimates in February.
That spike is fueled by the $145 billion estimated cost of the Biden administration’s student loan forgiveness plans and billions of dollars in aid to Ukraine, Israel, and Free China, the CBO notes. The agency also projects that “relative to the size of the economy, debt swells from 2024 to 2034.” Debt will increase to 122 percent of the GDP in 2034, compared to 99 percent this fiscal year.
“Today’s projections show a shocking new record: interest payments on the national debt will soon be higher as a share of the economy than they have ever been in the history of the country,” the president of the Committee for a Responsible Federal Budget, Maya MacGuineas, said in response to the report. “This is a surefire path to a weakened nation, and we must change course.”
The CBO report projects that the government will pay $892 billion in interest payments this year.
Without substantive changes in fiscal policy, debt will also exceed its “record share of the economy” by 2027, Ms. MacGuineas said, and the federal government is spending more on interest payments on debt than on defense and Medicare. “This should be domestic issue number one in the presidential campaign.”
Another budget watchdog, the Peter G. Peterson Foundation, agrees, noting that the debt should be a top priority of voters and elected leaders ahead of the election.
“CBO’s new report shows that the outlook for America’s critical national debt challenge is worsening,” the group’s chief executive, Michael Peterson, said in a statement. “It’s the definition of unsustainable.” “This November, America’s fiscal and economic future is on the ballot, and voters are calling for leaders who will prioritize solutions to our growing debt,” he said. “More than 90 percent of voters, across party lines, want candidates committed to addressing the debt, avoiding automatic cuts to Social Security and Medicare, and responsibly reforming the tax code.”
