The US Department of the Treasury announced that the deficit for the fiscal year 2024 reached $1.833 trillion, marking the third-highest deficit in history. The key factors contributing to the deficit expansion were the skyrocketing costs of interest on national debt, reaching $11.33 trillion, surpassing healthcare and defense expenditures.
The US Department of the Treasury released data on Friday showing that the fiscal budget deficit for the year 2024 increased to $1.833 trillion, the highest deficit level since COVID-19. The main reasons for the deficit expansion include the debt interest surpassing $1 trillion for the first time and the growth in social security retirement plans, healthcare, and military expenditures.
The deficit accounted for 6.4% of the GDP, drawing attention. As of September 30, 2024, the annual budget deficit increased by 8% compared to the fiscal year 2023, amounting to $138 billion. This makes the 2024 fiscal year deficit the third-largest in US history, only surpassed by the $3.132 trillion deficit in the 2020 fiscal year caused by pandemic relief efforts and the $2.772 trillion deficit in 2021.
The budget deficit for the fiscal year 2024, equivalent to 6.4% of the Gross Domestic Product (GDP), is higher than the 6.2% in 2023, according to Reuters. This figure may add variables to the upcoming presidential election, as Vice President Harris has consistently emphasized fiscal management as a campaign focus, claiming to be more capable than her Republican opponent, Trump. However, the expansion of the deficit may weaken her campaign argument and become a potential challenge to her fiscal policies.
The Congressional Budget Office (CBO) has warned that the deficit will continue to expand, with the US government’s total debt projected to rise from the current level of around 100% of GDP to 122% by 2034.
As the US debt continues to accumulate, the main driving factor behind the deficit for the fiscal year 2024 is the 29% increase in the cost of national debt interest, reaching $1.133 trillion, surpassing healthcare and defense expenditures. The interest cost as a percentage of GDP is 3.93%, lower than the 4.69% in 1991 but still the highest record since 1998. Other factors driving expenditure increases include social security benefits and military programs.
Although the US revenue for the fiscal year 2024 reached a record $4.919 trillion, an 11% increase from the previous year ($479 billion), mainly due to an increase in individual non-withholding taxes and corporate taxes, the expenses for the fiscal year 2024 grew by 10% ($617 billion), reaching $6.752 trillion, resulting in this year’s budget deficit increasing to $1.833 trillion.