Fact Check: "America's budget deficit reached 7% of GDP last year."
What We Know
The claim that America's budget deficit reached 7% of GDP last year is based on projections from the Congressional Budget Office (CBO). According to their report, the federal budget deficit for fiscal year 2024 is projected to be approximately $1.9 trillion, which, when adjusted for certain timing shifts in payments, equates to about 7% of GDP (CBO). This figure is expected to be consistent in the following year, with a projected deficit of 6.5% of GDP in 2025.
However, the context of the claim is important. The CBO's projections indicate that the deficit for the first 11 months of fiscal year 2023 (ending in August 2023) was approximately 5.7% of GDP, up from around 3.8% in the same period of the previous year (Brookings). This suggests that while the deficit is projected to reach 7% of GDP in the upcoming fiscal year, it did not actually reach that level in the previous fiscal year.
Analysis
The claim is partially true but requires clarification regarding the timing and context of the figures. The CBO's projection of a 7% deficit pertains specifically to fiscal year 2024, which begins on October 1, 2023, and ends on September 30, 2024. In contrast, the actual deficit for the fiscal year 2023, which ended in September 2023, was reported at 5.7% of GDP for the first 11 months (Brookings).
The increase in the deficit is attributed to a decline in revenues rather than a significant increase in spending. Factors contributing to this decline include lower capital gains tax revenues and adjustments related to federal student loan forgiveness programs (Brookings).
The reliability of the sources used is high, as the CBO is a nonpartisan agency that provides objective analyses of budgetary and economic issues. The Brookings Institution is also a reputable think tank known for its research and policy recommendations. However, it is essential to note that projections can change based on economic conditions and legislative actions, which may affect the final deficit figures.
Conclusion
The verdict on the claim is "Partially True." While the CBO projects a budget deficit of 7% of GDP for fiscal year 2024, this figure does not reflect the actual deficit for the previous fiscal year, which was approximately 5.7% of GDP. Therefore, the statement lacks context and specificity regarding the fiscal year being referenced.
