President Biden closed his last full fiscal year with a $1.833 trillion deficit, marking the worst nonpandemic year in history and raising fears the government is heading for an uncontrollable fiscal spiral.
Gross interest payments on the public debt also set a grim record, topping $1 trillion for the first time.
The government did see a remarkable surge in taxes, taking in nearly $480 billion in added revenue in fiscal 2024 — a nearly 11% leap. But even that couldn’t keep up with the rapacious pace of spending set by Congress and Mr. Biden, which rose nearly $620 billion from fiscal 2023.
In stark numbers, the government received $4.9 trillion in revenue in fiscal 2024, a record high. Spending was $6.8 trillion, which was below the COVID-19 pandemic record year of 2020.
The result was a sea of red ink that stained the Treasury Department’s year-end report Friday.
Mr. Biden’s team celebrated what it could, saying the rise in inflation isn’t as bad as it once was, the economy remains relatively strong and unemployment is low.
“Over the past three and a half years, the Biden-Harris administration has overseen a strong economic recovery, amassed one of the most successful legislative records in generations, grown the economy from the middle out and bottom up, lowered the deficit and delivered important progress to lower costs for the American people on behalf of the American people,” said Shalanda Young, White House budget director.
Administration officials also touted the nearly $2 trillion deficit as a win compared with the depths of the COVID-19 pandemic, when the government ran a $3.1 trillion hole in 2020 and was $2.8 trillion in arrears in 2021.
As emergency spending dried up, the government overspent by $1.4 trillion in 2022, but it’s become worse in the two years since, with a $1.7 trillion gap last year and this year’s figure topping that.
The Congressional Budget Office, in its year-end analysis, said the revenue surge was largely driven by individual income taxes, which grew by 11%, and corporate income taxes, which grew by 26% — though some of that was caused by IRS shifts in timing of payments and enforcement.
On the spending side, Social Security payments increased $107 billion, or 8%, and Medicare payments grew $78 billion, or 9%, because of new enrollees and higher rates paid to service providers, the CBO said.
But the biggest driver of the spending increase was interest on the public debt.
The Treasury Department said that rose $254 billion in one year, swamping the rise in Social Security and Medicare combined. Uncle Sam paid $1.133 trillion in interest payments last year, the government said.
Even though that set a record for sheer size, Treasury officials said that measured against the size of the economy, or gross domestic product, it was lower than in the early 1990s.
Officials said there was also some good news at the end of the fiscal year with a drop in the Federal Reserve’s target interest rate leading to a drop in interest payments for September, the final month of the fiscal year.
Interest payments are a particularly troubling part of the budget, according to analysts who see it as a black hole in the budget, paying for spending that happened years ago in some cases .
White House officials said this year’s deficit is somewhat misleading because last year’s deficit was artificially lowered after the Supreme Court invalidated Mr. Biden’s student loan forgiveness plan.
That artificially added $334 billion in revenue to last year’s tally, because of how those loan payments are captured in budgeting.
Without that, this year’s deficit would have been lower than last year’s, the Treasury Department said.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.