The Congressional Budget Office now expects deficits to be $1.9 trillion in fiscal year 2024 — up $400 billion from the previous forecast in February.
In a new analysis released on Tuesday, CBO explained that the bulk of the changes came from an increase in spending on student loans thanks to President Biden’s debt-forgiveness order, the foreign-aid bill, higher than expected spending on Medicaid, and the increased cost of running the FDIC.
Over the course of the decade from 2025 to 2034, CBO now projects cumulative deficits of $22.1 trillion, which is $2.1 trillion higher than previously expected because of a combination of policy changes and a gloomier than previously projected economic forecast.
By next year, CBO projects that the size of public debt will exceed economic output, and, by 2027, it will reach 106.2 percent of gross domestic product — eclipsing the previous record set during World War II. By the end of the decade, it will hit 122.4 percent of GDP.
Given the swelling debt burden and higher rates, interest payments will surpass $1 trillion next year — higher than the defense budget and nearly as high as the cost of Medicare. By 2034, CBO estimates the federal government will spend $1.7 trillion on interest before a penny is allocated to any other national priority.