‘Spending this year is now anticipated to be greater than previously projected,’ according to the Congressional Budget Office report.
The federal budget deficit reached $1.2 trillion in the first eight months of 2024, marking a $38 billion increase from 2023, according to a federal report that has triggered alarms among economic analysts who warn of an “unsustainable path” if the borrowing continues.
The Congressional Budget Office (CBO), a nonpartisan congressional review agency, reported that October 2023–May 2024 revenues were more than 10 percent ($294 billion) higher and spending was 8 percent ($332 billion) higher than the prior-year period figures.
The CBO cited several factors contributing to the budget’s increase, such as spending predicted to surpass previous expectations and the additional costs that will come with international aid and student loan forgiveness that the Biden administration has vowed to carry out.
Congress has approved giving Ukraine $113 billion since 2022 and passed a $95 billion foreign aid package in April.
The Biden administration has also committed to giving Ukraine $225 million in weapons through the Presidential Drawdown Authority package.
In addition, the Biden administration plans to forgive $147 billion in federal student loan debt, an initiative titled “Plan B.”
According to Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), the deficit increase reflects an irresponsibility in spending that must be curbed.
“Just like the heat, borrowing is on the rise and lawmakers should be feeling the pressure to bring it down,” Ms. MacGuineas said in a statement on the report. “With only four months left in the fiscal year, the United States has borrowed $1.2 trillion, a shocking $4.9 billion per day on average. Clearly, we need to figure out our fiscal situation soon, before things get more out of control.”
Spending
The CBO’s reported 8 percent ($332 billion) increase in spending from the same period last fiscal year brings the current fiscal-year-to-date total to $4.5 trillion, which includes increases of $74 billion for Social Security, $51 billion for Medicare, and $39 billion for the Department of Defense.
In May 2024, the federal deficit reached $348 billion, $108 billion more than in May 2023, the CBO reported.
According to the CRFB’s statement, the rolling deficit increased to $2.1 trillion, 6.2 percent of the gross domestic product.
In April, JPMorgan CEO Jamie Dimon warned that the U.S. economy is headed for trouble if it continues down this path, while in that same month, the International Monetary Fund issued a similar warning, stating that the “fiscal stance, out of line with long-term fiscal sustainability, is of particular concern.”
Mr. Dimon stated that the deficit isn’t simply going to disappear.
“All that puts me on the side of caution that things may not go as well as people expect,” he said.
‘An Unsustainable Path’
Echoing his sentiment, Ms. MacGuineas stated that financial woes will only grow if this trajectory isn’t changed.
“With little surprise, our economic challenges have continued to mount without debt only four years away from reaching a record share of the economy and interest costs soaring past our defense budget this year,” Ms. MacGuineas said. “The Social Security retirement trust fund is still on track to face insolvency in less than a decade with Medicare not far behind.”
If nothing changes, retirees face widespread cuts, she said.
“With rising interest rates, persistent inflation, and looming trust fund insolvency, there is much more to be done to correct our fiscal path,” Ms. MacGuineas said.
She called for an end to borrowing and a congressional aim to collaborate on reducing the deficit.
“Our fiscal house is barreling down an unsustainable path and we must act fast before tomorrow’s problems become today’s,” she said.
The CBO will publish its revised 2024 budget deficit next week.
The Epoch Times contacted the White House for comment but didn’t receive a reply by press time.
Tom Ozimek contributed to this report.