The U.S. budget deficit has surged to $1.833 trillion for fiscal 2024, marking the highest level outside the COVID-19 era. According to the Treasury Department, interest on the federal debt surpassed $1 trillion for the first time.
Ending September 30, the deficit rose by 8% from the $1.695 trillion recorded in fiscal 2023, making it the third-largest federal deficit in U.S. history. The only higher deficits were the pandemic-driven $3.132 trillion in fiscal 2020 and $2.772 trillion in fiscal 2021.
Fiscal 2023 saw a reduction in the deficit by reversing $330 billion in costs linked to President Joe Biden's student loan program after the U.S. Supreme Court struck it down. Without this adjustment, the deficit would have exceeded $2 trillion.
Receipts for fiscal 2024 reached a record $4.919 trillion, up 11% from the previous year, driven by growth in individual non-withheld and corporate tax collections. However, outlays climbed by 10%, amounting to $6.752 trillion.
Interest Costs
The primary factor behind the year's deficit is a 29% increase in interest costs for Treasury debt, which reached $1.133 trillion. This rise is attributed to higher interest rates and increased debt financing. Interest costs now surpass expenditures on Medicare for seniors and defense spending.
A senior Treasury official noted that interest costs as a share of GDP hit 3.93%, below the 1991 peak of 4.69% but the highest since December 1998. The weighted average interest rate on federal debt was 3.32% in September, up 35 basis points from last year but showing a slight decline from August's 3.35%, the first such drop since January 2022.
Other significant contributors to increased outlays include Social Security, up 7% to $1.520 trillion, Medicare at $1.050 trillion (a 4% rise), and military programs increasing by 6% to $826 billion.
In September, the government reported a $64 billion surplus, a reversal from a $171 billion deficit in September 2023. This improvement was largely due to calendar adjustments for benefit payments. Without these adjustments, there would have been a $16 billion deficit for September 2024.
Reported receipts in September reached a record $528 billion, up 13% from the previous year, while outlays were $463 billion, decreasing by 27% mainly due to the aforementioned calendar adjustments.
Reference(s):
cgtn.com
