The federal government’s budget shortfall for fiscal year 2024 grew by $139 billion from the previous year to reach $1.8 trillion, according to an estimate released Tuesday by the Congressional Budget Office.
Revenues grew by about 11%, or $479 billion, to top $4.9 trillion, fueled by an 11% rise in individual income taxes and a 26% jump in corporate income taxes.
Spending rose by 10%, or $617 billion, with the largest increase coming from the Department of Education, which saw a $308 billion jump — although that was almost entirely the result of the prior year’s accounting for the cancellation of President Joe Biden’s student debt relief program. Excluding that $330 billion decrease in 2023, spending by the Department of Education decreased by $22 billion in 2024.
The next-largest spending increase was for net interest on the public debt, up $240 billion, or 34%, as higher interest rates made government borrowing more expensive. Net interest costs reached $950 billion, more than the Pentagon’s $826 billion budget or the $869 billion spent on Medicare.
The estimated $1.8 trillion deficit for the year is $81 billion lower than CBO projected in June.
The annual total was also affected by calendar-driven shifts in the timing of some payments. If not for those effects, the 2024 deficit would have been 13% larger than in 2023 rather than 8%.
Why it matters: “Deficits of 6.4% of GDP during relative peace and prosperity are nearly unheard of in America,” Brian Riedl, a budget expert at the conservative Manhattan Institute, wrote on social media. The next president and the next Congress will be faced with critical fiscal decisions as they consider how to deal with the national debt, soaring interest costs and the expiration of 2017 tax cuts.
