US government runs largest primary budget deficit among advanced economies at 3.3% of GDP

Among the world’s major advanced economies, the US holds a distinction it probably doesn’t want to brag about: the largest primary budget deficit. The US came in at 7.6% of GDP in 2023, compared to a 4.6% average among other OECD member countries. The numbers behind the gap The primary deficit, which strips out interest costs to show how much the government is overspending on its actual operations, landed at 3.3% of GDP for FY2024. That was actually a modest improvement, down half a percentage point from FY2023. The Congressional Budget Office projects this figure will average somewhere between 3.1% and 3.6% of GDP over the longer term. Translation: this isn’t a temporary blip caused by a recession or emergency spending. It’s the baseline. Total federal budget deficit hit $1.8 trillion in fiscal year 2024, or 6.4% of GDP. Looking ahead to FY2026, the total federal budget deficit is expected to land between $1.8 trillion and $2.1 trillion, according to Treasury and CBO estimates. Why the deficit stays stubbornly high The usual suspects are driving the gap: mandatory entitlement programs like Social Security and Medicare, which grow automatically as the population ages, and interest ...