For the fiscal year 2024, the US budget deficit surpasses a staggering $1.8 trillion, as reported by the Congressional Budget Office.
During election seasons, the deficit is usually a topic of concern. However, previous President Trump and current Vice President Harris have declared expensive initiatives without specifying their full funding strategies. Trump's plan might boost the country's debt by an estimated $7.5 trillion over a decade, while Harris' package could potentially increase it by $3.5 trillion, based on a recent study by the Committee for a Responsible Federal Budget.
The persistent budget imbalance might complicate Congress's efforts to finalize a spending agreement for fiscal year 2025 and handle the debt ceiling, which resurfaces on January 2. Recently, lawmakers managed to agree on a deal to finance the government until December 20, thereby averting a shutdown.
The fiscal year 2023 deficit amounted to $1.7 trillion, though it would have hit around $2 trillion if President Biden's student debt forgiveness plan, which the Supreme Court disallowed prior to its implementation, was taken into account.
The federal government spent $6.8 trillion during fiscal year 2024, which ended on September 30. This represents a 10% increase compared to the previous fiscal year.
The country's interest payments on its debt skyrocketed to $950 billion, marking a 34% increase, mainly due to the significant rise in interest rates. Furthermore, spending on Social Security and Medicare climbed to over $1.4 trillion and nearly $870 billion respectively, as an increasing number of citizens became eligible for these entitlements and average benefit amounts and service costs escalated.
However, the impact of higher spending was partially offset by a strong 11% increase in tax revenue to $4.9 trillion. This rise was primarily driven by a $249 billion, or 11%, increase in individual income taxes and a $109 billion, or 26%, surge in corporate income taxes. A portion of this growth can be attributed to the Internal Revenue Service postponing the tax payment deadline for affected areas hit by natural disasters into fiscal year 2024.
The escalating expenses from Trump's and Harris' initiatives could ignite intense political debates over fiscal responsibility. Regardless of party affiliation, many politicians might emphasize the importance of transparent funding strategies in politics.
