Congressional Budget Office raises this year’s federal budget deficit projection by $400 billion

By FATIMA HUSSEIN and JOSH BOAK
Associated Press

WASHINGTON (AP) — The Congressional Budget Office said Tuesday that it projects this year’s federal budget deficit to be $400 billion higher, a 27% increase compared to its original estimate released in February. The major drivers of the change are higher costs from the supplemental spending package signed in April that provides military aid to Ukraine and Israel; higher than estimated costs of reducing student loan borrower balances; increased Medicaid spending; and higher spending on FDIC insurance after the agency has not yet recovered payments it made after the banking crises of 2023 and 2024.