The U.S. deficit is projected to roughly double this year, largely due to higher interest rates and lower tax revenue.
The Committee for a Responsible Federal Budget, an organization that pushes for lowering the deficit, is projecting the federal deficit will double this year to total about $2 trillion for the fiscal year that ends Sept. 30. Marc Goldwein, senior policy director at the organization, told The Hill that high interest rates, lower tax revenues and high inflation resulting in higher Social Security and Medicare costs have all contributed to the rising deficit.
“A big part of the story is just that there was sort of a one-time huge revenue surge in 2022 that’s done,” Goldwein said. “But the other stories are that we have structurally deficits really rising in 2023. And that’s a lot of that is because of interest costs.”
“These things add up,” he added. “It’s no one thing that’s causing us to go from $1 trillion to $2 trillion. It’s like six things.”
The Congressional Budget Office estimated last month that the federal budget deficit reached $1.6 trillion in the 10-month period ending in July.
Goldwein also noted the official 2022 deficit numbers are about $4 billion higher than they should be due to the student loan cancellation because the Biden administration recorded it on last year’s numbers even before the cancellation went into place. Therefore, their prediction is based on numbers that ignore the effects of the student debt cancellation that was later struck down by the Supreme Court.
This comes years after the U.S. hit record-shattering deficit levels in 2020 and 2021 that were largely due to the pandemic-era spending and borrowing. In 2020, the deficit hit $3.1 trillion and in 2021, it hit $2.8 trillion.
“We’re predicting this, but this is really based very heavily on things that the Congressional Budget Office has already set,” Goldwein noted.
He also said he expects the deficit to go down in 2024 compared to this year. He said that over the next decade, the deficit will likely creep up to $3 trillion if there are no other “predictable shocks.”
“I do expect deficits are trending upward over time,” he said. “But I do think they’re more likely to fall than to rise in 2024.”
The Washington Post first reported on the organization’s predictions.
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