11/16/2023 0 Comments U.s. federal budget 2021 pie chartIn addition to increased borrowing costs, rising debt could lead to slower economic growth. Higher than projected interest rates would further increase interest costs and debt. Net interest spending will continue to increase because of both higher levels of overall debt, and projected increases in interest rates over the long-term. Primary Deficit and Total Budget Deficit, Actual, and Projected net interest spending, which primarily represents the federal government’s cost to service its debt, steadily increases over the next 30 years, further widening the total budget deficits.spending for Social Security, federal health care programs, and all other federal program spending increases more than revenue, resulting in the primary deficit and.The growing debt is a consequence of borrowing to finance increasingly large annual budget deficits. Increasingly Large Deficits Drive Unsustainable Debt Levels In fiscal year 2022, federal debt held by the public grew by about $2 trillion, reaching $24.2 trillion. This decline is attributable to higher tax revenue and lower pandemic-related federal spending. The federal budget deficit in fiscal year 2022 was $1.4 trillion, a 50 percent decline from fiscal year 2021, but still the fourth largest in U.S. When the government spends more than it collects in revenue, Treasury borrows money to finance the resulting deficit. The Federal Budget Deficit in Fiscal Year 2022 Was among the Largest in History GAO projects that this ratio could reach more than twice the size of the economy by 2051, absent any changes in revenue and spending policies.ĭebt Held by the Public Projected to Grow Faster Than GDP Debt held by the public is projected to reach its historical high of 106 percent of GDP within 10 years and to continue to grow at an increasing pace. Debt held by the public is projected to grow at a faster pace than the size of the economy. Projections from the Office of Management and Budget and the Department of the Treasury, the Congressional Budget Office, and GAO all show that current fiscal policy is unsustainable over the long term. At the end of fiscal year 2022, debt held by the public was about 97 percent of gross domestic product (GDP). The federal government faces an unsustainable long-term fiscal future.
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