According to Bloomberg, the record-high US budget deficit is driven by spending on healthcare and the national debt. The national debt certainly requires huge servicing costs because its scale is alarming. What is wrong with healthcare and why does it need so huge funding?
Analysts believe that the enormous federal budget deficit in the US expected by the end of the fiscal year, that is, by September 30, is due to factors such as social spending and debt servicing costs. According to Shai Akabas, executive director of economic policy at the Bipartisan Policy Center, this situation is "driven by demographics and healthcare spending."
Rough estimates show that mandatory spending, including healthcare and debt servicing, has been swelling for many years. As a result, it will account for 14.6% of GDP (3 percentage points higher than the 40-year average) in the current fiscal year. The reason is the increasing number of elderly Americans covered by such social programs. Analysts reckon that more than 67 million Americans will receive benefits in 2024, 8 million more than in 2015. Besides, spending on major healthcare programs will reach 5.8% of GDP. This item on the budget has not exceeded 3.4% over the last 40 years.
Additionally, elevated interest rates have pushed up the costs of servicing the national debt. This year, these costs are projected to be 3.2% of GDP, the highest level since 1991.
Previously, experts attributed the growing US federal budget deficit, which will reach $1.9 trillion, to military aid to Ukraine and Israel. The deficit is expected to balloon to $2.8 trillion by 2034.
