US deficit for fiscal 2024 estimated at US$1.8 trillion, largest after Covid
This comes as debt interest costs jumped sharply and outlays rose for Social Security, Medicare and health insurance tax credits
THE Congressional Budget Office (CBO) estimated on Tuesday (Oct 8) a US federal deficit of US$1.8 trillion for fiscal 2024, the highest in the post-Covid era, as debt interest costs jumped sharply and outlays rose for Social Security, Medicare and health insurance tax credits.
The estimate, which precedes the US Treasury Department’s year-end budget report later this month, shows a deficit up 11 per cent from the US$1.7 trillion fiscal 2023 gap, but slightly lower than the US$1.9 trillion deficit estimated in June by CBO.
US Vice-President Kamala Harris is arguing that she would be more fiscally responsible as president than Republican rival Donald Trump, pledging to fully offset new spending with tax increases elsewhere.
A fiscal think tank, the Committee for a Responsible Federal Budget, estimated on Monday that Trump’s plans would pile up US$7.5 trillion in new debt, more than twice the US$3.5 trillion from Harris’ proposals.
But after significant US deficit declines in 2021 and 2022 as the economy recovered and Covid-19 rescue spending faded, deficits have grown significantly during the past two years, and CBO estimates that “baseline” deficits, which assume no changes to current laws, will grow US$22 trillion over the next 10 years.
By the numbers
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CBO estimated that total revenues rose 11 per cent to US$4.9 trillion, powered by higher individual income taxes and corporate income taxes as economic growth remained strong. The non-partisan budget referee agency estimated that outlays for the fiscal year ended Sep 30 totalled US$6.8 trillion, up 11 per cent from fiscal 2023.
The biggest growth in outlays comes from interest on the public debt, which rose 34 per cent to US$950 billion, while spending on Medicare, Social Security and the military also increased.
The year-on-year deficit comparisons were affected by the fiscal 2023 reversal of US$330 billion in costs associated with President Joe Biden’s student loan forgiveness plan that was struck down by the Supreme Court. Without the reversal, last year’s deficit would have exceeded US$2 trillion.
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Some Republicans seized on the estimates to claim that Biden and Harris were fiscally irresponsible.
“President Biden and Vice-President Harris have ignored resounding messages from Iowans and Americans nationwide, as well as alarms from global credit ratings companies. By consistently choosing a spendthrift agenda over fiscal sanity, this administration has hamstrung our economy for generations to come,” Republican Senator Chuck Grassley said in a statement.
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