U.S. Budget Deficits Soar to Near $1.9 Trillion Amid Rising Debt Crisis
The U.S. government has been grappling with significant budget deficits in recent years. The most recent fiscal year saw a nearly $1.8 trillion deficit, marking one of the largest in history. Meanwhile, the national debt has surpassed $38 trillion, raising concerns about the country's financial future.
The Inflation Reduction Act, signed into law by President Biden in 2022, is projected to reduce deficits by $238 billion over a decade. However, the Congressional Budget Office (CBO) warns that deficits are set to rise to around $2 trillion annually in the next decade due to increasing interest on the national debt and spending on entitlement programs.
Looking back, the federal government ran a $1.412 trillion deficit in fiscal year 2009, largely due to the financial crisis and the Great Recession. Spending on programs like TARP and the American Recovery and Reinvestment Act contributed to this large deficit. In the most recently completed fiscal year, the deficit stood at $1.78 trillion, with the One Big Beautiful Bill Act increasing deficits by about $4 trillion over the next decade.
The U.S. is projected to run a $1.9 trillion budget deficit this year, which would be the third-largest in history. This follows a $1.834 trillion deficit in fiscal year 2024, driven by high interest rates and increased spending on Social Security and Medicare due to an aging population.
The U.S. government's budget deficits and national debt continue to pose significant challenges. While the Inflation Reduction Act aims to reduce deficits, the CBO's projections suggest that increasing interest on the national debt and spending on entitlement programs may offset these gains. As the national debt tops $38 trillion, it is crucial for policymakers to address these fiscal issues to ensure the country's long-term economic stability.
