The U.S. Treasury building in Washington, D.C., on Aug. 15, 2023.
Nathan Howard | Bloomberg | Getty Images
The Biden administration recorded a budget deficit that exceeded $1.8 trillion in fiscal year 2024, representing an increase of over 8% from the previous year and marking the third highest deficit on record, as reported by the Treasury Department on Friday.
Despite a modest surplus in September, the total deficit reached $1.833 trillion, which is $138 billion higher than the previous year. The only years that have seen a larger deficit were 2020 and 2021, when the government spent trillions on Covid-19-related expenses.
Even with record receipts of $4.9 trillion, the government’s outlays of $6.75 trillion far exceeded its income.
Government debt has now climbed to $35.7 trillion, an increase of $2.3 trillion from the end of fiscal year 2023.
One contributing factor to the growing debt and deficit is the high interest rates resulting from the Federal Reserve’s efforts to combat inflation.
Interest expenses for the year totaled $1.16 trillion, marking the first time this figure has surpassed the trillion-dollar mark. After accounting for interest earned on government investments, the net total reached a record $882 billion, making it the third-largest expenditure in the budget, behind only Social Security and health care.
The average interest rate on all government debt in 2024 was 3.32%, up from 2.97% the previous year, according to a Treasury official.
In September, the government did manage to run a surplus of $64.3 billion, partially due to calendar effects that shifted benefit payments into August, which experienced a $380 billion deficit, the largest monthly deficit of the year.
As a percentage of the total U.S. economy, the deficit currently stands at over 6%, a historically unusual figure for a period of economic expansion and well above the 3.7% average over the past 50 years, as reported by the Congressional Budget Office.
The CBO projects that deficits will continue to rise, reaching $2.8 trillion by 2034. On the debt side, the office anticipates an increase from the current level of around 100% of GDP to 122% by 2034.