The Federal Deficit is approaching $2 trillion and getting worse, experts warn
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The Federal Government budget deficit it was nearly $2 billion last year and is expected to expand further in the coming years, with experts warning that the government must tighten the deficit to ensure stability.
The non-Congressional Budget Office (CBO) released its projected deficit for fiscal year 2024, which was $1.834 trillion. The FY2024 deficit was $139 billion larger than the actual deficit recorded in the previous fiscal year, as spending growth outpaced tax revenue growth.
Based on the preliminary estimate of the FY2024 deficit, it ranks as the third largest budget deficit in US history. It trails only a $3.132 billion shortfall in FY2020 and a $2.775 billion shortfall in FY2021, each incurred amid higher federal spending on pandemic relief programs.
Deficit growth is coming in increase in government spending on entitlement programs like Social Security and Medicare amid an aging American population, and higher interest payments on debt caused by higher interest rates and the growing national debt.
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The federal budget deficit is expected to continue to grow in the coming years unless federal lawmakers act. (iStock / Stock)
Spending on debt service payments increased by $240 billion in FY2024 compared to the previous year, according to the CBO estimate. social Security spending was up $107 billion and Medicare was up $25 billion from the previous year.
“As one fiscal year comes to an end and another begins, it’s clear that we have a lot to fix,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget (CRFB). “Now we’re borrowing $5 billion a day, while interest payments are rising.”
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“It’s about $2 trillion, less than a year ago twice pre-epidemic levels. We are facing major storms with debt set to reach an all-time record for the economy by 2027; and we don’t even have a plan to deal with our financial challenges,” he said.
“As rising interest rates and our structural deficits drive up the national debt, it’s clear that this is a fiscal election that has major implications for America’s future,” said Michael Peterson, CEO of the Peter G. Peterson Foundation.
The deficit is expected to continue to increase in the coming years. The CBO predicted that the deficit is on track to exceed $2 trillion annually starting in FY2030 and will be about $2.9 trillion just four years later.
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The economic plans issued so far by the two leading presidential contenders, Vice President Harris and former President Trump, each is expected to cause the deficit to grow faster and choose to resist addressing significant deficits in the Social Security trust fund over the next decade.
A CRFB analysis found that Harris’ economic plan could cause the deficit to be $3.5 trillion larger over the 2026-2035 period, while Trump’s plan it would increase the deficit by $7.5 trillion over that period.
“We cannot afford to continue borrowing at this rate forever. It’s been a long time since policy makers stopped adding to our money. national debt growth and instead agree on a way forward that puts debt on a downward, sustainable path for future generations,” explained MacGuineas.
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“The leaders we elect in this recession will face a series of critical days, including debt recovery, the expiration of billions tax cutsand automatic cuts to Social Security are growing closer. “Voters are aware and want to hear about financial solutions, but unfortunately we haven’t seen enough plans from either of the presidential candidates,” Peterson added.
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