US budget deficit exceeds $1.8 trillion in fiscal 2024, third highest in history

The U.S. budget deficit has climbed to $1.833 trillion for fiscal 2024, marking the highest level outside the COVID era. This increase is largely attributed to interest on federal debt surpassing $1 trillion for the first time, along with rising expenditures for Social Security, health care, and military programs, according to the Treasury Department's report 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 U.S. history, after the pandemic relief-driven deficits of $3.132 trillion in fiscal 2020 and $2.772 trillion in fiscal 2021, News.Az reports, citing Reuters.

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 U.S. 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.

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 program for seniors and for defense 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% from 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.

News.Az