2024 US Budget Deficit Forecast Upgrades

Recently, according to the latest forecast from the Non Partisan Congressional Budget Office, the federal budget deficit for the fiscal year 2024 will reach $1.9 trillion. The Congressional Budget Office of the United States has released a remarkable report, significantly increasing the federal budget deficit forecast for fiscal year 2024 by 27%, to nearly $2 trillion. This number is not only higher than the $1.69 trillion in fiscal year 2023, but also far exceeds the forecast released by the agency in February, highlighting the severity of the US fiscal situation and the uncertainty of the economic outlook.

Firstly, the deficit forecast is $400 billion higher than the latest estimate from the Congressional Budget Office in February, representing a 27% increase. The Congressional Budget Office cited several reasons, including a recent bill passed by the US Congress to provide $95 billion in aid to Ukraine, Israel, and the Indo Pacific region. The bill was passed in April after several months of delay, increasing Medicaid spending, and the $70 billion bank bankruptcy in 2023 due to the Federal Deposit Insurance Corporation's slower than expected repayment rate.

Secondly, another factor contributing to the increase in predicted values is President Biden's student loan policy, which includes cancelling loans, adjusting loan balances, and implementing new repayment plans to provide borrowers with more subsidies. The Congressional Budget Office stated that these policies increased the deficit by $145 billion. Biden has so far cancelled $167 billion in loans from 4.75 million borrowers and plans to expand this range to nearly 30 million total borrowers. Debt relief mainly focuses on those who have already participated in repayment plans that promise ultimate debt relief, such as income driven repayment plans that offer relief after 20-25 years of repayment, or public service loan relief plans that offer relief after 10 years of repayment. Poor coordination between these two projects often leads to people being unable to obtain debt relief at the end of their repayment plans. So far, approximately $119 billion in total debt relief has been allocated to these two projects. The government believes that debt relief can promote short-term consumer spending and have a positive impact on borrowers' ability to purchase homes and start businesses, but critics are concerned about the costs of the US government. In the past few months, other factors have also exacerbated the deficit, including rising interest rates - which have led to higher costs for the government to repay its debt.

Furthermore, there is an urgent 2024 election issue: the ongoing impact of the 2017 Trump tax cuts, which have increased the deficit by trillions of dollars. If former President Trump is elected, he has stated that he will extend the bill, and the Congressional Budget Office predicts that the bill may ultimately cost about $5 trillion over 10 years. The White House is attempting to explain the reason for the increase in the deficit based on the tax bill, especially as the expiration date of the bill in 2025 approaches. For deficit hawks, the latest growth is another warning that national debt needs congressional reform. Bates said Republican officials have planned to further increase the deficit by 2025 by providing tax subsidies to businesses that maintain high prices despite declining inflation. The Congressional Budget Office said that by 2034, the total amount of US treasury bond will exceed 56 trillion US dollars.

Overall, the 2024 US budget deficit estimate has been raised by 27% to approximately $1.9 trillion, mainly due to factors such as additional spending, increased economic growth, and inflation forecasts. In the next 10 years, the total deficit of the United States is expected to reach $22.1 trillion, and the debt to GDP ratio will reach a record level, posing new challenges to the country's fiscal situation.