US budget deficit hits $1.8 trillion in third record high
3 Min Read
The US Treasury Department has reported that the total budget gap has grown by $138 billion.
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US President Joe Biden waves as he boards Air Force One for departure at Brandenburg Airport in Schoenefeld near Berlin, Germany, Friday, Oct. 18, 2024. (AP)
The United States has announced that its budget deficit has increased to $1.8 trillion over the past year, marking the third highest figure on record.
On Friday, the US Treasury Department reported that the total budget gap grew by $138 billion for the fiscal year ending September 30, 2024.
The Treasury cited a nearly 30% increase in interest payments on public debt, primarily due to rising interest rates, as a key factor in the widening deficit.
Additionally, the deficit was partially influenced by a reversal of over $330 billion in expenses from the previous year, when the Supreme Court overturned President Joe Biden’s student loan forgiveness program.
A White House official attributed the increase in the deficit to congressional Republicans, stating that “tax cuts led to low revenue levels that increased the debt.”
Moreover, excessive military spending and rising Social Security costs further exacerbated the situation.
Despite the crisis, Treasury Secretary Janet Yellen claimed that the US economy has not only stayed resilient but also demonstrated growth in 2024. She further stated that the government's total debt could have reached $4.8 trillion if the Biden administration had not managed to save $3 trillion.
Ukraine, 'Israel' aid, student debt spikes US 2024 budget deficit
A June report by the nonpartisan Congressional Budget Office (CBO) reported in June that the US national debt is on course to increase by 27% this fiscal year compared to earlier estimates.
The CBO had updated its predictions and anticipated the federal budget deficit to be $1.9 trillion in the 2024 fiscal year, rising to about $2.0 trillion when accounting for a shift in the timing of some payments.
CBO Director Phillip Swagel reported this would be nearly $400 billion higher than the CBO's February prediction, leaving the deficit at 7.0% of GDP.
Much of the rise from the February prediction is due to a $145 billion increase in predicted student loan outlays after the Biden administration revised the cost of subsidies and suggested a regulation to minimize student loan balances.
As a result, the CBO predicts that government debt owned by the public will climb from 99% this fiscal year to 122% in 2034.
Read more: Under Biden, US budget deficit hits historic high of $6.6 trillion
