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What were the major drivers of U.S. federal deficit spending in FY2024?
Executive summary
The federal deficit for FY2024 was about $1.8–$1.9 trillion (roughly 6.3–6.4% of GDP), driven chiefly by unusually large interest costs on the national debt and rising mandatory spending for major benefit programs such as Social Security and health care, with revenues also rising but not enough to close the gap (CBO, Treasury, CRFB, PGPF) [1] [2] [3] [4]. Multiple analyses single out net interest as a major new driver—interest payments rose sharply and for the first time exceeded spending on some large programs—while trust‑fund pressures and enacted legislation also added to projected deficits [5] [4] [6].
1. Interest costs: the new heavyweight on the budget
Analysts agree that rising net interest on the public debt was a primary contributor to FY2024’s larger deficit: interest payments grew dramatically (to roughly $882 billion in Treasury reporting or about $950 billion in some analyses), making net interest the second‑largest federal outlay and exceeding spending on Medicare and defense in some accounts [5] [7] [8]. The rise reflects both the accumulated stock of debt and higher market interest rates; multiple sources characterize interest as a leading—and growing—driver of deficits in 2024 [5] [7].
2. Big entitlement programs: Social Security and health care pressure spending
Mandatory spending on the nation’s largest benefit programs increased in FY2024 and is repeatedly cited as a key part of rising outlays; Social Security and major health programs together account for a large share of the budget and growth in those programs helps push outlays higher [6] [9] [8]. Visual Capitalist and CBO materials highlight record or near‑record spending on Social Security and healthcare as important contributors to the $6.8–$6.9 trillion in federal outlays reported for the year [8] [6].
3. Revenues rose—but not enough
Federal revenues increased in FY2024—CBO noted an 11% ($479 billion) rise—and that helped blunt but not erase the shift toward larger deficits; revenues growth lagged the combined increase in outlays, leaving a net shortfall [2]. Multiple observers point out that even with strong revenue collections in parts of 2024 (for example corporate taxes in some months), revenue gains did not keep pace with rising interest and mandatory spending [2] [7].
4. Timing, accounting quirks, and one‑time items complicate comparisons
Analysts caution that timing shifts and accounting changes affected headline comparisons across years: adjustments for payment timing (fiscal year start on a weekend) and the reversal of an administration student‑debt cancellation accounting entry mean year‑to‑year figures can be misleading unless adjusted (CBO) [2]. CBO states that excluding some timing and one‑off effects changes the comparative picture between FY2023 and FY2024 deficits by roughly $100 billion [2].
5. Recently enacted legislation and policy choices increased projected deficits
CBO’s update incorporated recently enacted legislation that raised projected deficits—CBO singled out about $1.6 trillion added to the 10‑year baseline from such laws—and analysts note that new bills passed in 2024 contributed to the larger fiscal outlook [6]. Commentators such as CRFB and PGPF highlight that policy choices, not just economic conditions, matter for the deficit trajectory [3] [4].
6. Broader context and where analysts disagree or emphasize different drivers
While most sources concur that interest costs and mandatory program spending were central, they vary on emphasis: CBO frames the story as a combination of rising interest and mandatory spending outpacing discretionary declines and revenue growth [6], whereas PGFP and other fiscal watchdogs place sharper emphasis on rapidly rising interest costs and looming trust fund issues for programs serving older Americans [4]. The Treasury and GAO stress the raw numbers—$1.8 trillion deficit and about $2.0 trillion increase in debt held by the public—linking deficits directly to borrowing needs [10] [11].
7. What the reporting does not settle
Available sources do not mention specific micro‑drivers such as precise contributions of individual agencies beyond program aggregates in a consistent, single table across all reports; nor do they converge on a single exact dollar split between interest, entitlement growth, discretionary choices, and one‑offs [2] [5]. Different outlets report slightly different interest totals and deficit figures depending on definitions and timing adjustments [5] [1] [7].
Bottom line: FY2024’s roughly $1.8–$1.9 trillion deficit reflected a mix of sharply higher net interest costs, expanding mandatory program spending (Social Security and health care), and policy choices—offset in part by stronger revenues—but interest’s rapid rise is the clearest new driver singled out across the reporting [5] [2] [6] [4].