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 says 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 projection was announced by the federal agency on Tuesday. The major drivers of the change include: 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.