The federal government is expected to generate $4.9 trillion in revenue in fiscal year 2024 but incur $6.5 trillion in outlays in the same time period, resulting in a projected budget deficit of $1.6 trillion, according to a recent report by the Congressional Budget Office.
The CBO says in “The Budget and Economic Outlook: 2024 to 2034,” the deficit in FY2024, which is seen to account for 5.6 percent of U.S. gross domestic product, will grow to $1.8 trillion in FY2025, or 6.1 percent of GDP.
The growth in deficit is seen as a result of outlay increases outpacing revenue increases. In FY2025, revenues are expected to stay the same at about $4.9 trillion while outlays are expected to rise to about $6.7 trillion.
The CBO attributes the projected outlay growth to rising social security and Medicare spending and rising net interest stemming from higher interest rates and mounting debt. As of FY2023, debt held by the public accounted for 97 percent of GDP. That figure is expected to hit 99 percent in FY2024 and 101.7 percent in FY2025.
The CBO regularly releases an outlook to report budget and economy projections up to 10 years out predicated on tax and spending laws remaining unchanged. This latest report was issued Wednesday.