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It is the third-largest federal deficit in US history, after the COVID era deficits of $3.132 trillion in fiscal 2020 and $2.772 trillion in fiscal 2021
Published : 19 Oct 2024, 11:00 AM
The US budget deficit grew to $1.833 trillion for fiscal 2024, the highest outside of the COVID era, as interest on the federal debt exceeded $1 trillion for the first time and spending grew for the Social Security retirement programme, health care and the military, the Treasury Department said on Friday.
The deficit for the year ended Sept 30 was up 8%, or $138 billion, from the $1.695 trillion recorded in fiscal 2023. It was the third-largest federal deficit in US history, after the pandemic relief-driven deficits of $3.132 trillion in fiscal 2020 and $2.772 trillion in fiscal 2021.
The fiscal 2023 deficit had been reduced by the reversal of $330 billion of costs associated with President Joe Biden's student loan program after it was struck down by the US Supreme Court. It would have topped $2 trillion without this anomaly.
The sizable fiscal 2024 budget gap of 6.4% of gross domestic product, up from 6.2% a year earlier, could pose problems for Vice President Kamala Harris' arguments ahead of the Nov 5 presidential election that she would be a better fiscal steward than Republican opponent Donald Trump.
A fiscal think-tank, the Committee for a Responsible Federal Budget, has estimated that Trump's plans would pile up $7.5 trillion in new debt, more than twice the $3.5 trillion envisaged from Harris' proposals.
White House budget director Shalanda Young emphasised the strong growth in the US economy and the Biden administration's investments in clean energy, infrastructure and advanced manufacturing.
"This Administration has done this while maintaining a commitment to fiscal responsibility by ensuring the wealthiest among us and large corporations pay their fair share and cutting wasteful spending on special interests," Young said in a statement, referring to plans by Biden and Harris to raise taxes on these groups.
US receipts for the 2024 fiscal year hit a record $4.919 trillion, up 11%, or $479 billion, from a year earlier, as individual non-withheld and corporate tax collections grew. Fiscal 2024 outlays rose 10%, or $617 billion, to $6.752 trillion.
INTEREST COSTS
The biggest driver of the year's deficit was a 29% increase in interest costs for Treasury debt to $1.133 trillion due to a combination of higher interest rates and more debt to finance. The total exceeded outlays for the Medicare healthcare programme for seniors and defence spending.
But a senior Treasury official said the interest costs as a share of GDP reached 3.93%, below the 1991 record of 4.69% but the highest percentage since 4.01% in December 1998.
The weighted average interest rate on federal debt was 3.32% in September, up 35 basis points from a year earlier, but down from 3.35% in August, marking the first monthly decline since January 2022.
Other drivers of increased outlays for the fiscal year included Social Security, up 7% to $1.520 trillion, Medicare, up 4% to $1.050 trillion, and military programs, up 6% to $826 billion.
For September, the government reported a $64 billion surplus, compared to a $171 billion deficit in September 2023, but the improvement was largely due to calendar adjustments for benefit payments. Without these, there would have been a $16 billion deficit in September 2024.
Reported receipts were a record for September at $528 billion, up 13% from a year earlier, while outlays were $463 billion, down 27% largely due to the calendar adjustments.
