The U.S. federal budget deficit will double from $1 trillion last year to $2 trillion this year, when President Joe Biden’s unsuccessful plan to forgive student loans is excluded, according to a new estimate from the Congressional Budget Office on Monday.
When the student-loan program is included, this year’s deficit will be about $330 billion smaller, the CBO said. But that’s really just accounting. Last year, the program widened the deficit by $379 billion.
According to the CBO’s estimate, so far this fiscal year, revenues are 10% lower and outlays are 3% higher than the prior year.
Wall Street is growing concerned about the ballooning deficit and federal debt. Analysts say it is one reason for higher bond yields BX:TMUBMUSD10Y.
The deficit has become a political football, but without any sense of resolution.
House Republicans point to it when pushing their plans to cut spending further than was agreed to when the debt ceiling was raised. Democrats in the White House and the Senate counter that Republicans refuse to consider any tax hikes on the wealthy to help boost government coffers and reduce the deficit.
The Treasury won’t release the full fiscal-year deficit until mid-October. On Tuesday, the department is scheduled to release the August deficit, which is the 11th month of the fiscal year that ends Sept. 30.
The CBO estimated that U.S. will record a budget surplus of $90 billion in August compared with a deficit of $220 in the same month one year ago. The big shift is due entirely to the drop in outlays from the student-loan program, which will be recorded last month.