The Congressional Budget Office (CBO) is revising its projections for this year’s US budget deficit, saying it will be significantly higher than previous estimates.
In a new report, the agency says it now projects government expenditures will outpace revenues to the tune of $1.7 trillion in 2023.
“On the basis of its estimate of the deficit through July and preliminary estimates of revenues and outlays in August and September, CBO now expects that the total deficit for 2023 will be $1.7 trillion, or about $200 billion larger than the estimate it published in May.”
The figure represents a 13% jump from the CBO’s projections from four months ago.
After 2023, the CBO predicts that the country’s budget deficit will range between $1.6 trillion and $1.8 trillion before reaching $2.9 trillion in 2033.
In a CNBC interview, CBO Director Phillip Swagel says that the US government is facing a challenging and unusual situation.
“The economy is recovering. We’re past Covid. The labor market is looking much closer to normal, and yet the deficit is still wide.”
Swagel also says that while economic growth will likely improve the country’s financial situation, it will likely not be enough to bridge the gap.
“The challenge we face is that the fiscal deficit and trajectory are so difficult that even super optimistic growth is not enough by itself to make us sustainable. Growth will help and will make the policy environment better, but ultimately policymakers need to make some choices whether on spending or on revenue.”
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