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By David Lawder
WASHINGTON (Reuters) - The U.S. Congressional Budget Office on Wednesday projected a slightly smaller $1.507 trillion federal deficit for fiscal 2024 as increased revenues from a strong economy and employment offsets higher outlays for clean energy tax credits and interest on the public debt.
The CBO said that the deficit will dip this year from $1.695 trillion in fiscal 2023, but resume its march upward to $1.772 trillion in fiscal 2025 and reach $2.579 trillion in fiscal 2034.
The figures are based on current tax and spending laws and assume that individual tax cuts passed by Republicans in 2017 expire at the end of 2025, pushing revenues higher in later years.
The CBO also projected a slightly smaller cumulative 10-year deficit, to $20.016 trillion for the fiscal 2025-2034 period, compared with last year's estimate of a $20.314 trillion deficit for 2024-2033.
It said that caps on discretionary spending on government agencies and programs passed last year would hold down the deficits by $2.6 trillion over the next year.
"In our projections, the deficit is also smaller than it was last year, because economic output is greater, partly as a result of more people working," CBO Director Phillip Swagel said in a statement.
The non-partisan budget referee agency is projecting an increased workforce of 5.2 million people, mostly due to net immigration, which will boost economic output by $7 trillion and tax revenues by $1 trillion over the 2023-2034 period, he said.
The CBO revised upward its projections of the cost of the Biden administration's clean energy tax credits, as well as the reductions of gasoline tax revenues because of new vehicle emissions standards expected to accelerate the shift to electric vehicles.
Together these changes will raise the deficit by $25 billion in fiscal 2024 and $428 billion over the 2024-2033 period, CBO said.
(Reporting by David Lawder; Editing by Andrea Ricci)
