Government data released on Friday revealed that the US budget deficit for the previous year has expanded to $1.7 trillion, potentially increasing the challenges for President Joe Biden's re-election bid in 2024.

The deficit increased by $320 billion for the fiscal year ending on September 30. This rise was attributed to reduced tax revenues and decreased earnings deposits by the Federal Reserve due to higher interest rates.

According to a joint statement from the Treasury Department and the Office of Management and Budget, total government expenditures slightly decreased compared to the previous year.

This change occurred after the Supreme Court invalidated President Biden's student loan forgiveness program.

However, there were increases in spending in certain categories, including a $134 billion rise in Social Security payments due to cost-of-living adjustments, and a $162 billion increase in expenditures related to interest on the public debt.

"The deficit remains over $1 trillion lower than when President Biden took office, thanks in large part to a strong economic recovery," said the joint statement.

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The substantial increase in the deficit last year can be attributed to a combination of long-term budget pressures and unforeseen economic factors.

The government's tax revenue falls significantly short of covering the costs of federal programs, and this gap is expected to widen as the aging population increases the expenses of Medicare and Social Security.

According to budget office projections, federal spending will average around 24 percent of the nation's annual economic output over the next decade.

During the same period, government tax receipts are estimated to be approximately 18 percent of the economy, assuming that many of the tax cuts implemented during President Trump's tenure will expire in 2025.

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