US budget deficit tops $1.8 trillion for fiscal year 2024

The US Treasury Department reported on Friday that the US budget deficit rose to $1.833 trillion in fiscal year 2024, the highest level outside the Covid-19 era, as interest on the federal debt exceeded $1 trillion for the first time and spending on the Social Security, Medicare and military retirement programs grew. The deficit for the fiscal year ending Sept. 30 rose 8%, or $138 billion, from $1.695 trillion in fiscal 2023. It was the third-largest federal deficit in U.S. history, behind the $3.132 trillion COVID-19 relief deficit in fiscal 2020 and $2.772 trillion in fiscal 2021.

The fiscal 2023 deficit was reduced by reversing $330 billion in costs associated with President Joe Biden’s student loan program after it was invalidated by the U.S. Supreme Court, which would have exceeded $2 trillion.

The large budget gap in fiscal 2024 of 6.4% of gross domestic product, up from 6.2% the previous year, poses a problem for Vice President Kamala Harris’s arguments ahead of the Nov. 5 presidential election that she would be a better fiscal steward than her Republican rival Donald Trump. Meanwhile, the Committee for a Responsible Federal Budget, a financial think tank, estimates that Trump’s plans would lead to $7.5 trillion in new debt, more than double the $3.5 trillion projected by Harris’s proposals.

U.S. revenues for fiscal 2024 were a record $4.919 trillion, up 11%, or $479 billion, from the previous year, as individual and corporate tax revenues grew. Fiscal 2024 spending rose 10%, or $617 billion, to $6.752 trillion.

The biggest driver of the deficit for the year was a 29% increase in interest costs on Treasury debt to $1.133 trillion, outpacing Medicare and defense spending. But a senior Treasury official said the weighted average interest rate on federal debt interest costs began to decline in September for the first time since January 2022.

For September, the government reported a surplus of $64 billion, compared with a deficit of $171 billion in September 2023, but the improvement was largely due to calendar adjustments for entitlement payments. Without those adjustments, there would have been a deficit of $16 billion in September 2024.

Reported revenues for September were a record $528 billion, up 13% from a year earlier, while outlays were $463 billion, down 27%, largely due to calendar adjustments.