Budget Deficit Jumps to $347 Billion in May as Spending, Interest Costs Soar

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Outlays increased 22 percent while revenues rose by just 5 percent.

The U.S. government budget deficit totaled $347 billion in May, up from a $240 billion deficit in the same month a year earlier, according to the latest Monthly Treasury Statement data. This surpassed the consensus estimate of $250 billion.

Eight months into the 2024 fiscal year, the fiscal year-to-date federal shortfall totals $1.202 trillion, compared with a deficit of $1.695 trillion in the entire fiscal year of 2023.

In May, outlays rose 22 percent to $670 billion, while revenue climbed 5 percent to $323 billion.

Medicare, at $142 billion, and Social Security, at $123 billion, were the top outlays in the month. On a fiscal year-to-date basis, Social Security costs reached $960 billion and Medicare outlays have been $607 billion.

Net interest was the third-largest budget item last month, exceeding defense spending. It totaled $87 billion in May and $601 billion in the first eight months of the current fiscal year, higher than spending on health care, defense, income security, and veteransโ€™ benefits.

The Treasury forecasts that interest on Treasury debt securities will surpass $1.14 trillion by the end of fiscal year 2025.

Debt-servicing costs are now equal to nearly 80 percent of all personal income taxes, which totaled approximately $143 billion in May.

The 12-month rolling deficit (June 2023 to May 2024) totals $1.6 trillion, up $108 billion from the previous 12-month span. This represents a little more than 6 percent of the gross domestic product.

According to the Committee for a Responsible Federal Budget, the rolling deficit would be $2.1 trillion if the effects of student loan cancellation are removed from the numbers. Last year, the administrationโ€™s student debt forgiveness was ruled illegal.

With the federal government continuing to borrow more, โ€œlawmakers should be feeling the pressure to bring it down,โ€ says Maya MacGuineas, president of the non-profit public policy organization.

โ€œWith only four months left in the fiscal year, the United States has borrowed $1.2 trillion, a shocking $4.9 billion per day on average. Clearly, we need to figure out our fiscal situation soon, before things get more out of control,โ€ Ms. MacGuineas said.

โ€œWith rising interest rates, persistent inflation, and looming trust fund insolvency, there is much more to be done to correct our fiscal path.โ€

By Andrew Moran

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