Federal Budget Deficit Forecast Jumps $400 Billion, Fueled by Student Debt Forgiveness
In 2024, the federal budget deficit is estimated to reach nearly $2 trillion, according to new projections released by the Congressional Budget Office (CBO) this week. In February, the agency predicted that the deficit would only be $1.58 trillion. However, spending increases have caused the projected deficit to increase by $400 billion, a staggering 27 percent hike.
According to the CBO, 80 percent of the spike in the deficit can be blamed on four sources of government spending.
The largest source, responsible for $145 billion of the increase, is changes to the federal student loan program that have resulted in massive waves of federal student loan forgiveness and increased forgiveness going forward.
Second, the CBO’s report details how the costs for “deposit insurance have increased by about $70 billion because the Federal Deposit Insurance Corporation (FDIC) is not recovering payments it made when resolving bank failures in 2023 and 2024 as quickly as CBO previously anticipated.”
Third, an additional $60 billion in cost increases came from additional legislation. And lastly, $50 billion in increased spending came from higher-than-expected Medicaid costs.
The long-term outlook for the budget deficit has increased too. In February, the CBO estimated that in 2034,
Article from Reason.com
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