A new report by the Congressional Budget Office has revealed that spending restraints agreed upon by President Biden and Republicans last year will slow the growth in the federal deficit by approximately $1.4 trillion over the next decade. The restrictions, negotiated during the Fiscal Responsibility Act, involved new caps on a portion of the federal budget, and an agreement to suspend the nation’s debt ceiling. The report also noted additional details surrounding the national debt and how higher interest rates will offset some of the effects of the spending caps, ultimately helping reduce the growth of discretionary spending.
While the new accord will help save trillions of dollars, it was also mentioned that the national debt is now at $34.15 trillion and is projected to grow substantially by an estimated $18.9 trillion over the next decade. Despite the optimistic findings, disagreements between Congress members may lead to a partial government shutdown if federal spending for the current fiscal year is not approved. Additionally, there are concerns over whether Congress will adhere to the terms of the Biden-McCarthy deal.
The Congressional Budget Office’s report raises questions about the nation’s fiscal trajectory. Although the new agreement provides hope for addressing the federal deficit, further discussions and policy decisions will influence the nation’s economic outlook, including the expiration of President Trump’s tax cuts and the expansion of the child tax credit. Regardless of the progress made, analysts remain wary about the long-term state of the nation’s finances and whether Congress will uphold the spending limits set by the Biden-McCarthy deal.