US Budget Deficit Hits $1.9 Trillion—With 1 Month Left to Go

The national debt clock at a bus station in Washington on Aug. 6, 2024. Madalina Vasiliu/The Epoch Times

The U.S. budget deficit surged to $1.9 trillion in August, with one month left until the end of the fiscal year, fueled by burdensome interest charges.

According to the Monthly Treasury Statement, the federal government registered a $380 billion deficit in August, the widest monthly shortfall since September 2022. This starkly contrasts with the $89 billion surplus reported in August 2023 and is in line with the latest Monthly Budget Review from the Congressional Budget Office (CBO).

“August has been a deficit month 69 times out of 70 fiscal years because there are no major tax due dates in this month,” the Treasury Department stated.

Revenues in August rose by 8 percent year over year, totaling $306.54 billion. Outlays also increased by about 8 percent, topping $686 billion.

The federal deficit reached $1.897 trillion in the first 11 months of the 2024 fiscal year, up by 24 percent from the same period a year ago.

The nonpartisan budget watchdog said the shortfall would be about $302 billion larger if it were not for “shifts in the timing of certain payments” and deferred tax accounting.

The 12-month rolling deficit—from September 2023 to August 2024—was about $2.1 trillion.

Next month’s Treasury data could show the budget shortfall exceeding the CBO’s upwardly adjusted $1.9 trillion federal deficit forecast for fiscal year 2024.

In the fiscal year to date, the top budgetary items have been Social Security ($1.337 trillion), Medicare ($850 billion), health ($824 billion), and national defense ($798 billion).

Interest charges continue to be a sizable strain on the federal budget.

So far this fiscal year, interest charges—gross and net—have been the second-largest budgetary item, hitting nearly $1.05 trillion last month. The Treasury estimates that interest payments will surpass $1.157 trillion.

The U.S. government’s interest payments have consumed 48 percent of individual income tax collections this year.

Additionally, Torsten Slok, the chief economist at Apollo Wealth Management, estimates that the average daily interest expense is $3 billion. If the Federal Reserve cuts interest rates by 1 percent, daily interest charges would fall to $2.5 billion.

As of Sept. 11, the national debt stands at $35.331 trillion, up by about $1.34 trillion since the beginning of the year.

The CBO projected in June that the national debt will top $50 trillion in the next 10 years, fueled by growing deficits, higher net interest payments, and greater mandatory spending.

National Debt and the 2024 Election

Government finances, according to ING strategists, have been largely affected by the “legacy of huge fiscal transfers from the public sector to the private sector during the pandemic under presidencies of both Trump and Biden.”

“Even if the candidates were seriously motivated to shrink the deficit, there are major structural issues that make it difficult to get a real grip on the expenditure side of the equation,” they wrote in a June note.

According to Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, neither of the U.S. presidential nominees for the 2024 election has adequately addressed the nation’s mounting debt.

“While everyone’s eyes are on the presidential election, our fiscal trajectory continues down an unsustainable path with things continuing to get worse,” MacGuineas said in a statement. “In order for the next president to tackle this issue as they should, they will need to have leveled with the public about the threats the debt presents and what will be needed to fix the problem. So far neither candidate has come close to doing this.”

The record national debt and ballooning federal deficit were not mentioned during the Sept. 10 presidential debate.