ChartTalk: The U.S. federal budget deficit is
growing—and threatens to expand further with recent proposals in Congress. The
infographic illustrates the sources of federal revenues and the programs to
which those monies flow.
What makes up America’s ballooning federal budget deficit?
The gap between federal revenue and expenditures is
widening, as illustrated in the graphic below.
Where do the revenues come from? Where is the money going?
Source: Visual Capitalist
The figures used to create this graphic were sourced
from FiscalData.Treasury.gov.
In fiscal year 2024, the U.S. federal government recorded a
deficit of $1.83 trillion—the third-largest in history outside the pandemic
era. Although the government collected $4.9 trillion in revenue, it also spent
a massive $6.8 trillion, driven by rising Social Security, health care, and net
interest costs.
Here are the federal government’s three biggest categories
of spending:
Social Security
Social Security is the largest single line item in the
federal budget due to the combination of longer life expectancies and an aging
population. The number of beneficiaries is growing quickly as baby boomers
retire, even outpacing contributions from the current workforce.
Projections indicate that, without legislative changes, the
Social Security Trust Fund may be depleted by the mid-2030s, potentially
leading to benefit reductions of about 22% unless reforms are enacted.
Medicaid
Factors driving Medicaid spending include
higher-than-anticipated enrollment and increased health care costs.
The program supports more than 80 million Americans,
including low-income families, seniors, and individuals with disabilities.
Recent legislative proposals aim to reduce federal Medicaid spending by up to
$880 billion over the next decade, which could impact coverage for millions of
beneficiaries.
Net interest on debt
The federal government’s interest payments on the national
debt hit a record high in FY2024, nearly tripling from 2020 levels ($882
billion versus $345 billion). Interest payments now exceed the defense budget,
and are expected to reach $1 trillion annually in the near future. This
unprecedented growth is due to the combination of regular government
overspending and higher interest rates (which were introduced to combat
inflation).
Close behind: Medicare and Defense
Following the $882 billion for interest on the debt are
Medicare and defense spending, both at $874 billion.
