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CBO: Debt Ceiling Deal Will Reduce Growth of Deficit by $1.4 Trillion Over Next Decade

S.J. Steinhardt
Published Date:
Feb 9, 2024

iStock-462525859 America Budget Debt Money

The agreement on the debt ceiling that was struck in May by President Biden and then-Speaker Kevin McCarthy of the U.S. House of Representatives will help slow the growth in the federal deficit by roughly $1.4 trillion over the next decade, according to a Congressional Budget Office (CBO) study, The Washington Post reported.

While the CBO still said the national debt will still grow by an estimated $18.9 trillion substantially over the next decade, that is still less than the projected $20.3 trillion by 2033 before the deal, the Post reported

The national dent is currently $34.2 trillion, according to the U.S. Treasury Department.

“From 2024 to 2033, the deficit is about 7 percent smaller than we projected last year, primarily as a result of the Fiscal Responsibility Act of 2023” and the following government spending agreements, CBO Director Phillip Swagel said after the report’s release, the Post reported. “Together, those laws reduced the growth of discretionary spending.”

“The Fiscal Responsibility Act,” as the agreement is known, “is the largest deficit-reduction bill in over a decade, and hopefully can be a starting point for further conversation in looking at other parts of the budget and tax code to really change our debt trajectory,” Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, a nonpartisan think tank, told The Post. “This was the first time in many years we started to rein in any part of the budget and put some limits on appropriators. It puts discipline on both the defense and domestic side.”

As Congress debates the budget for the upcoming fiscal year, other decisions may change the outlook. Certain tax provisions of the 2017 Tax Cuts and Jobs Act are due to expire next year, the House recently passed tax legislation that would enhance the child tax credit and extend tax breaks for businesses, and Congress is also considering more aid to Ukraine and Israel.

The Biden-McCarthy deal put two-year spending limits on a portion of federal spending, but one analyst warned that Congress will go beyond those amounts in later years.

“It’s worth noting that Congress has no intention of maintaining these caps, and they’ve already agreed to bust them,” said Brian Riedl, a budget policy analyst at the Manhattan Institute, a center-right think tank, in an interview with the Post. “The caps only last two years, and so CBO is assuming that Congress will permanently keep reduced discretionary spending levels, which history does not support.”

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