The U.S. federal budget deficit for fiscal year 2024 surged to $1.8 trillion, marking the largest deficit in three years, according to the Congressional Budget Office (CBO). This deficit is up by $139 billion from the $1.7 trillion shortfall in fiscal year 2023, highlighting the federal government’s increasingly precarious fiscal condition.
Key contributors to this rising deficit include:
- Increased government spending: The federal government spent more than $6.75 trillion, while it only collected $4.92 trillion in revenue.
- Higher interest payments: Interest on public debt soared by $240 billion to a total of $950 billion, due to the Federal Reserve’s rate hikes to combat inflation.
- Social Security and Medicare costs: Social Security spending rose by 8%, and Medicare by 9%, driven by cost-of-living adjustments and higher enrollments.
This growing deficit comes despite no major war or recession, with the national debt now standing at approximately $35.7 trillion. The Medicare trust fund is expected to be depleted by 2036, and the Social Security trust fund by 2035, according to recent projections.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), warned of the unsustainable borrowing rate, noting that the U.S. is borrowing $5 billion per day. She emphasized the urgent need for policymakers to address the fiscal imbalance.
Republican lawmakers, like Senator Chuck Grassley, blamed the Biden administration for prioritizing spending over fiscal responsibility. However, neither Vice President Kamala Harris nor former President Donald Trump has put forward detailed plans to tackle the debt crisis. The CRFB estimates that Harris’ policies could increase the national debt by $3.5 trillion over the next decade, while Trump’s plans could add $7.5 trillion.
There are bipartisan calls to establish a fiscal commission to address the government’s finances, but no such commission has been formed.
