US budget deficit widens to $1.8 trillion, third highest on record

The United States on Friday 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 fiscal year, 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 as spending soared amid the COVID-19 pandemic.

In the latest report, there was a near 30 percent rise in spending on interest on the public debt, largely due to higher interest rates, the Treasury noted.

But the department added that the widened deficit overall was partly due to a reversal of over $300 billion in costs last year, when President Joe Biden’s student loan forgiveness program was struck down by the Supreme Court.

In the latest fiscal year, there was also 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.

But 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).

As a percentage of GDP, the deficit was 6.4 percent, up from 6.2 percent in the fiscal year of 2023.

The 2024 deficit was $76 billion lower than an estimate published in March, both agencies added.

In announcing the latest budget figures, Treasury Secretary Janet Yellen stressed 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 also 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 percent to 98 percent.

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 has begun lowering rates last month, signaling more cuts to come.

Tied to how the economy performs are concerns surrounding the national debt.