The US Department of the Treasury announced that the budget deficit for the fiscal year 2024 reached $1.833 trillion, marking the third-highest record in history. The key factors contributing to the widening deficit were a significant increase in debt interest costs, reaching $11.33 trillion, surpassing healthcare and defense expenditures.
The budget deficit for the fiscal year 2024, as revealed by the data released by the US Department of the Treasury on Friday, amounted to $1.833 trillion, the highest level since COVID-19. The main reasons for the deficit expansion include debt interest exceeding $1 trillion for the first time and the growth of social security retirement programs, healthcare, and military expenditures.
The deficit accounted for 6.4% of GDP, attracting attention. As of September 30, 2024, the annual budget deficit increased by 8% compared to the fiscal year 2023, equivalent to $138 billion. This makes the deficit for the fiscal year 2024 the third-largest fiscal deficit in US history, following the $3.132 trillion deficit in the fiscal year 2020 caused by pandemic relief 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 emphasized fiscal management as a key point in her campaign, asserting her superiority over Republican opponent Trump in this aspect. However, the expansion of the deficit may weaken her campaign argument and become a potential challenge to her fiscal policy.
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 about 100% of GDP to 122% by 2034.
As US debt continues to accumulate, the main driving factor behind the deficit for the fiscal year 2024 is a 29% increase in the cost of debt interest, reaching $1.133 trillion, surpassing healthcare and defense expenditures. The interest cost accounts for 3.93% of GDP, although lower than the 4.69% in 1991, it is still the highest record since 1998. Other factors driving expenditure growth include social security benefits and military programs.
Although the US revenue for the fiscal year 2024 reached a record high of $4.919 trillion, an 11% increase compared to the previous year ($479 billion), mainly due to an increase in individual non-withheld taxes and corporate tax revenues, the expenses for the fiscal year 2024 grew by 10% ($617 billion), reaching $6.752 trillion, resulting in the budget deficit for this year reaching $1.833 trillion.