Yet again, the federal government spent far more than it collected in revenue, racking up a budget deficit of $1.8 trillion for fiscal year 2024, according to the Congressional Budget Office.
While the deficit is typically a concern during presidential election years, former President Donald Trump and Vice President Kamala Harris have unveiled pricey policies without detailing how they’d fully pay for the measures. Trump’s platform could hike the national debt by $7.5 trillion over a decade, while Harris’ package could increase it by $3.5 trillion, according to a recent analysis by the Committee for a Responsible Federal Budget.
Also, the continued fiscal imbalance could make it more difficult for Congress to reach a spending deal for fiscal year 2025 and to address the debt ceiling, which returns on January 2. Lawmakers reached a deal last month to fund the government until December 20, avoiding a shutdown.
The fiscal year 2023 deficit clocked in at $1.7 trillion – though it would have been about $2 trillion if the impact of President Joe Biden’s federal student debt cancellation plan, which the Supreme Court struck down before it took effect, was not included.
The federal government spent $6.8 trillion in fiscal year 2024, which ended September 30. That’s about 10% more than the prior fiscal year.
Net interest payments on the nation’s debt soared to $950 billion, up 34%, driven up by significantly higher interest rates. Also, spending on Social Security and Medicare increased to more than $1.4 trillion and nearly $870 billion, respectively, as more Americans became eligible for the entitlement programs and as average benefit payments and payment rates for services rose.
The impact of the higher spending was somewhat blunted by a robust 11% increase in tax revenue to $4.9 trillion. The boost was driven by a $249 billion, or 11%, increase in individual income taxes and a $109 billion, or 26%, jump in corporate income taxes. Part of the increase is due to the Internal Revenue Service delaying the deadline for tax payments into fiscal year 2024 in areas affected by natural disasters.
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