The US government budget deficit hit the highest level since the Covid pandemic years in 2024, fueled by increased debt interest costs and higher Social Security and defense costs – more than offset by increases in tax revenues, reports Bloomberg.
The deficit for the fiscal year that ended Sept. 30 hit $1.83 trillion, up from $1.7 trillion a year earlier and the largest on record except for fiscal years 2020 and 2021, Department of State data showed US Treasury released on Friday.
Treasury officials confirmed that the extension was largely due to consideration of the Biden administration’s student debt relief plan, which the Supreme Court reversed in mid-2023. Stripping out that effect and adjusting for calendar differences, the deficit shrank 4 percent, Treasury officials said Friday.
Large US budget deficit | Excluding pandemic years, the shortage is the largest in the nation’s history
However, the figures for both years exceeded 6% of gross domestic product, an unusually large burden outside of economic recessions or world wars. This year the ratio was 6.4%, up from 6.2% in 2023.
Social Security spending rose $103 billion, due to the increased number of beneficiaries combined with an increase in the cost of living. Defense increased by $50 billion.
Interest expense
Both divisions were less than the interest paid by the Treasury Department on the country’s huge debt. That spending increased $254 billion to $1.1 trillion for the year, an increase of 29%. At around 3.93% of GDP, this burden is the highest since 1998.
Revenue rose 11% in the fiscal year, boosted mainly by higher tax receipts. Strong gains in jobs and wages were a factor, along with tax receipts delayed from 2023 due to natural disasters, Treasury officials said.
The large deficit could complicate the spending plans of each candidate in next month’s presidential election. With Congress headed for a narrow partisan divide, decisions loom in 2025 about what to do with the tax cuts enacted during the Trump administration in 2017 and cap reform in debt.
Treasury Secretary Janet Yellen said in a statement accompanying the budget data that the Biden administration’s budget proposals would reduce the deficit by $3 trillion over time, in part by raising taxes on corporations and the poorest Americans. rich
Most economists expect the debt to continue to grow under each presidential candidate. The Committee for a Responsible Federal Budget estimates that Kamala Harris’ economic plan would increase the debt by $3.5 trillion over ten years, while Donald Trump would increase it by $7.5 trillion.
The government may see some relief next year as the Fed begins to reduce borrowing costs. The weighted average interest rate on total debt outstanding at the end of September was 3.32%, at around 15-year highs, but down slightly from the previous month, the first decline in almost three years.
2024-10-19 18:22:00
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