The United States on Friday, October 18 reported a budget deficit of $1.8 trillion for the past year, widening from 2023’s level on greater spending, including for interest on the public debt.
The overall deficit expanded by $138 billion for the year ending September 30, said the Treasury Department. The nation’s debt remains a key concern for voters ahead of November’s presidential election.
This year marks the third highest US deficit, behind 2021 and 2020, according to the Treasury. In the 2020 budget year, the deficit hit a record of $3.1 trillion as spending soared to help the economy weather the Covid-19 pandemic.
In the latest fiscal year, there was a near 30% rise in spending on interest on the public debt, largely due to higher interest rates, the Treasury noted. It topped $1 trillion. But the department added that the widened deficit overall was partly due to a reversal of over $330 billion in costs last year when President Joe Biden’s student loan forgiveness program was struck down by the Supreme Court.
The latest fiscal year also saw an increase in Social Security spending and that on defense. The rise in receipts, meanwhile, was mainly due to increases in the amount of individual and corporate income tax collected, among other areas.
Although receipts rose from fiscal year 2023, “they remain below historical averages as a share of GDP,” said the Treasury and Office of Management and Budget (OMB).
‘Fiscal responsibility’
As a percentage of GDP, the deficit was 6.4%, up from 6.2% in the fiscal year of 2023. Following the report, a White House official pointed to Congressional Republicans for “tax cuts that led to low revenue levels that increased the debt.”
In announcing the latest budget figures, Treasury Secretary Janet Yellen noted that the US economy remained resilient in 2024. Shalanda Young, director of the OMB, added that the Biden administration has maintained “a commitment to fiscal responsibility.”
Both agencies noted that total federal borrowing from the public grew by $2.0 trillion during the latest fiscal year, to $28.2 trillion. The rise in borrowing included funds to finance the deficit. As a percentage of GDP, borrowing from the public rose from 96% to 98%.
The economy has been a key issue of concern in the White House race, with voters feeling the effects of heightened costs of living and as higher interest rates bite. But the Federal Reserve began lowering rates last month, signaling more cuts to come.
