The U.S. budget deficit soared to $1.833 trillion for fiscal year 2024, marking the highest deficit outside of the pandemic period. Key drivers included federal debt interest surpassing $1 trillion
for the first time and increased spending on Social Security, healthcare, and military programs, according to the Treasury Department's report on Friday.
The deficit grew by 8%, or $138 billion, compared to the $1.695 trillion recorded in fiscal 2023. It now stands as the third-largest deficit in U.S. history, following the pandemic relief-driven deficits of $3.132 trillion in 2020 and $2.772 trillion in 2021.
Fiscal 2023's deficit had been reduced by $330 billion due to the reversal of costs associated with President Joe Biden's student loan forgiveness plan, which was struck down by the Supreme Court. Without this, the deficit for 2023 would have exceeded $2 trillion.
The fiscal 2024 budget shortfall, amounting to 6.4% of gross domestic product (GDP), up from 6.2% the previous year, may present a challenge for Vice President Kamala Harris as she positions herself as a better fiscal steward than her Republican opponent, Donald Trump, in the upcoming November 5 presidential election.
The Committee for a Responsible Federal Budget, a fiscal think tank, estimates that Trump's proposals would add $7.5 trillion in new debt—more than double the $3.5 trillion projected from Harris' plans.
White House budget director Shalanda Young highlighted the U.S. economy's robust growth and the administration's investments in clean energy, infrastructure, and advanced manufacturing. She emphasized that the Biden administration has maintained fiscal responsibility by ensuring that wealthy individuals and large corporations pay their fair share while reducing wasteful spending on special interests.
Record Revenue and Increased Spending
For fiscal year 2024, U.S. government receipts reached a record $4.919 trillion, a rise of 11%, or $479 billion, driven by higher individual non-withheld and corporate tax collections. However, spending also increased by 10%, or $617 billion, totaling $6.752 trillion.
Rising Interest Costs
The primary factor behind the growing deficit was a 29% increase in interest costs on Treasury debt, which climbed to $1.133 trillion due to higher interest rates and an expanding debt load. This surpassed spending on both Medicare and defense programs.
A senior Treasury official noted that while interest costs as a percentage of GDP reached 3.93%—the highest since 1998—it remains below the 1991 peak of 4.69%.
Other major spending areas included Social Security, which rose by 7% to $1.520 trillion, Medicare, up 4% to $1.050 trillion, and military programs, which saw a 6% increase to $826 billion.
September Report: Surplus and Record Receipts
In September, the government posted a $64 billion surplus, a sharp improvement from the $171 billion deficit recorded in September 2023. However, this improvement was largely due to calendar adjustments for benefit payments. Without these adjustments, the government would have posted a $16 billion deficit for the month.
September's receipts hit a record $528 billion, up 13% from the previous year, while outlays decreased by 27%, totaling $463 billion, largely due to the calendar changes. Photo by Aido2002 at English Wikipedia.