The Congressional Budget Office estimated Tuesday that the federal budget deficit for fiscal 2024 rose to $1.8 trillion, the highest in three years.
The analysis showed that fiscal 2024’s deficit increased from $1.7 trillion in fiscal 2023. The new numbers come as the federal government faces an increasingly dire fiscal situation.
Specifically, the federal budget deficit increased by $139 billion more than last year’s shortfall. The government collected $4.92 trillion in tax revenue but spent more than $6.75 trillion, according to the CBO’s latest update.
Interest costs have surged, given that the Federal Reserve was forced to hike its interest rate target to its highest level in more than two decades in response to inflation. Spending on interest on the public debt rose by $240 billion last year, to total $950 billion.
Spending on Social Security also rose by about 8% because of cost-of-living increases raising the average benefit payment and a larger number of people receiving benefits.
Medicare spending also rose about 9% because of rising enrollment and higher payment rates for services.
The growing deficit is another reminder that the federal government is on shaky financial footing. The United States is consistently spending more money than it is taking in. The fiscal 2024 deficit was more than 6% of gross domestic product, a major shortfall for a year in which the country was not at war or in recession.
As of Tuesday, the national debt has risen to about $35.7 trillion. Meanwhile, the Medicare trust fund will be exhausted in 2036, and the combined Social Security trust fund will become exhausted in 2035, the programs’ trustees projected in May.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, pointed out in a statement that the U.S. is borrowing some $5 billion per day and that it is “clear that we have a lot of course correcting to do.”
“At nearly $2 trillion, last year’s deficit was almost double prepandemic levels,” MacGuineas said.
“We cannot afford to continue to borrow at this rate indefinitely,” she added. “It is long past time that policymakers stop adding to our growing national debt and instead agree on a path forward that puts the debt on a downward, sustainable path for future generations.”
After the update was released, some Republicans blamed President Joe Biden and Vice President Kamala Harris, the Democratic nominee for president. Senate Budget Committee ranking member Chuck Grassley (R-IA) said there needs to be a change from the current pace that the administration has set.
“President Biden and Vice President Harris have ignored resounding messages from Iowans and Americans nationwide, as well as alarms from global credit ratings companies,” Grassley said in a statement. “By consistently choosing a spendthrift agenda over fiscal sanity, this administration has hamstrung our economy for generations to come.”
Neither Harris nor former President Donald Trump has released comprehensive plans to address the growing debt and deficits or prevent Social Security and Medicare from becoming insolvent within the next decade or so.
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The CRFB released new projections for both candidates’ economic plans this week. It found that Harris’s plan is expected to raise the debt by about $3.5 trillion over the next decade, while, under the group’s central estimate, Trump’s plan would add $7.5 trillion to the national debt. Both candidates pushed back on the estimates when contacted by the Washington Examiner.
There has been some push in Congress to form a bipartisan fiscal commission tasked with stabilizing the government’s finances, although no such commission is in place.
