The Congressional Budget Office (CBO) estimated Tuesday that the federal budget deficit reached $1.6 trillion in the 10-month period ending in July.
The agency said the amount is more than double the deficit seen during the same period the year prior, while noting a 10 percent drop in revenues and 10 percent increase in outlays.
The office also projected the total deficit for the current fiscal year, which ends in late September, would reach $1.7 trillion, up $200 billion from its previous projection earlier this year. That includes a $222 billion deficit for July — which is also $11 billion higher than the same period the year before.
Among the drivers behind the drop in revenues highlighted by the CBO in its estimates is a 9 percent decline in individual income and payroll taxes, amounting to $313 billion. The office also notes a dive in remittances from the Federal Reserve.
“Remittances from the Federal Reserve decreased from $99 billion to less than $1 billion. Higher short-term interest rates raised the central bank’s interest expenses above its income, eliminating the profits of most Federal Reserve banks,” the office said.
The office estimated an increase of 12 percent in outlays for the country’s biggest mandatory spending programs — totaling $244 billion. That includes an 11 percent rise in spending for Social Security benefits, an 18 percent increase in Medicare outlays and 6 percent increase in Medicaid outlays.
Another notable increase recorded during the 10-month period was spending for the Department of Education, as outlays for the office rose 57 percent, or by $91 billion. The CBO said that increase was “primarily because in July the Administration recorded the costs ($71 billion) it estimated for modifying outstanding student loans under the new income-driven repayment plan, which, on average, reduces borrowers’ monthly and total payments.”
The CBO additionally found that net outlays for interest on the public debt saw an increase of 34 percent, totaling $146 billion, while noting the high interest rates seen during the 10-month timeframe.