The Biden administration reported a budget deficit exceeding $1.8 trillion for fiscal year 2024, marking an increase of over 8% from the previous year and ranking as the third highest on record, according to the Treasury Department. Despite achieving a modest surplus in September, the total shortfall reached $1.833 trillion, which is $138 billion more than the previous year. The only larger deficits occurred in 2020 and 2021 due to substantial government spending related to the Covid-19 pandemic. This deficit arose even with record revenues of $4.9 trillion, which were significantly lower than expenditures totaling $6.75 trillion. Consequently, government debt has surged to $35.7 trillion, reflecting a rise of $2.3 trillion since the end of fiscal 2023.
One significant factor worsening the debt and deficit situation is the high interest rates resulting from the Federal Reserve's rate hikes to combat inflation. For the first time, interest expenses for the year reached $1.16 trillion. After accounting for interest earned on government investments, the net total was a record $882 billion, making it the third-largest budget expenditure, surpassed only by Social Security and health care. The average interest rate on all government debt rose to 3.32% in 2024, up from 2.97% the previous year, according to a Treasury official.