The U.S. Department of the Treasury announced on Friday that due to the federal debt interest in the United States surpassing 1 trillion U.S. dollars for the first time, along with the growth in social security retirement plans, healthcare, and military spending, the fiscal year 2024 budget deficit increased to 1.833 trillion U.S. dollars, the highest level outside of the COVID-19 era.

The deficit for the fiscal year ending September 30 increased by 8% compared to the 1.695 trillion U.S. dollars recorded in fiscal year 2023, amounting to an additional 138 billion U.S. dollars. This marks the third-largest federal deficit in U.S. history, following the 3.132 trillion U.S. dollars in fiscal year 2020 and the 2.772 trillion U.S. dollars in fiscal year 2021.

The fiscal year 2024 budget shortfall represents 6.4% of the Gross Domestic Product (GDP), higher than the 6.2% of the previous year.

The fiscal think tank, the Committee for a Responsible Federal Budget, estimates that Trump's plan would accumulate an additional 7.5 trillion U.S. dollars in debt, more than double the 3.5 trillion U.S. dollars proposed by Harris.

Budget Director Shalanda Young emphasized the strong economic growth of the United States and the Biden administration's investments in clean energy, infrastructure, and advanced manufacturing.

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In a statement, Young said, "This administration is committed to fiscal responsibility while doing so, by ensuring that the United States and the wealthiest among large corporations pay their fair share, and by cutting wasteful spending by special interest groups." She was referring to Biden and Harris's plans to raise taxes on these groups.

The U.S. fiscal year 2024 revenue reached a record 4.919 trillion U.S. dollars, a year-on-year increase of 11%, or 479 billion U.S. dollars, due to the growth in personal non-withheld taxes and corporate tax collections. Fiscal year 2024 expenditures increased by 10%, or 617 billion U.S. dollars, to 6.752 trillion U.S. dollars.

Interest Costs

The largest driver of this year's deficit is the 29% increase in the interest cost of U.S. Treasury debt, reaching 1.133 trillion U.S. dollars, due to rising interest rates and more debt financing. The total exceeded the spending on the Medicare health care program for the elderly and defense expenditures.

However, a senior official from the U.S. Department of the Treasury stated that the interest cost as a percentage of GDP reached 3.93%, lower than the record of 4.69% in 1991, but the highest percentage since 4.01% in December 1998.The weighted average interest rate of U.S. federal debt in September was 3.32%, an increase of 35 basis points year-over-year, but lower than the 3.35% in August, marking the first monthly decrease since January 2022.

Other drivers of increased spending in this fiscal year include Social Security, which grew by 7% to $1.520 trillion; Medicare, which increased by 4% to $1.050 trillion; and military programs, which rose by 6% to $826 billion.