> ## Content Index > Fetch the complete content index at: https://ivn.us/llms.txt > Use this file to discover other available public pages before exploring further. # Just The Facts: 10 Things to Know About the US Deficit - URL: https://ivn.us/just-facts-10-things-know-about-us-deficit-2025-02-17/ - Published: 2025-02-17T18:51:44.000Z - Updated: 2025-06-18T23:39:07.000Z - Author: David Nevins - Tags: Economy, National Debt *Editor's Note: This piece [originally published](https://thefulcrum.us/money-politics/us-fiscal-deficit?ref=ivn.us) on The Fulcrum and has been re-published on IVN with permission from the publisher.* The size of the United States deficit and the potential dangers to the United States economy is widely debated in Congress. This writing presents our readers with **just the facts on the deficit.** **All data and information were obtained from Copilot, an AI-powered chatbot owned and operated by Microsoft Corporation.* **What was the total United States deficit in 2024 and what is 1% of that in dollars?** The total U.S. federal budget deficit for the 2024 fiscal year was **$1.83 trillion**. Thus, 1% of 1.83 trillion is 18.3 billion dollars and one-tenth of 1% is 18 Billion dollars. **What percent of the U.S. deficit accounts for entitlement programs?** In the 2024 fiscal year, **entitlement programs** such as Social Security, Medicare, and Medicaid accounted for **about 50% of the total federal budget**. This means that roughly half of the federal spending was dedicated to these major entitlement programs. **What percent of the U.S. deficit is the Department of Defense?** Defense-related spending accounts for a significant portion of the U.S. federal budget. In the 2024 fiscal year, defense spending was approximately **13.3% of the entire federal budget**. However, when considering the U.S. deficit, defense spending is a major contributor but not the largest portion, compared to entitlement programs like Social Security, Medicare, and Medicaid. Thus, entitlements and defense added together account for roughly 63% of the total federal budget. **What percent of the U.S. deficit is Foreign Aid?** Foreign aid represents a very small portion of the U.S. federal budget. In the 2023 fiscal year, foreign aid was about **1.2% of the total federal budget**. When considering the U.S. deficit, foreign aid is an even smaller fraction. **What percent of the U.S. deficit is Veteran Benefits and Services?** Veterans' benefits and services account for approximately 4.7% of the total federal budget. **What percent of the U.S. deficit is net interest payments?** Net interest payments on the U.S. national debt are a significant portion of the federal budget. In 2023, net interest payments totaled $658 billion, which was about 2.4% of the U.S. GDP. For the fiscal year 2024, interest payments reached roughly $1.2 trillion, making it the third-largest spending category behind Social Security and Medicare. Every 1% increase in the interest rate paid on the deficit increases the deficit by roughly 120 billion dollars. **How does the U.S. deficit compare as a percentage of GDP now versus the last 20 years?** The U.S. federal budget deficit as a percentage of GDP has fluctuated over the past 20 years. Here's a brief overview: - **Early 2000s**: The deficit was relatively low, around 2-3% of GDP. - **2008-2009**: The deficit spiked due to the financial crisis and stimulus spending, reaching around 10% of GDP. - **2010s**: The deficit gradually decreased as the economy recovered, hovering around 4-5% of GDP. - **2020-2021**: The COVID-19 pandemic caused another spike, with the deficit reaching around 15% of GDP due to emergency spending and economic relief measures. - **2022-2023**: The deficit began to decrease again but remained higher than pre-pandemic levels, around 6-7% of GDP. - **2024**: The deficit is projected to be around 6.2% of GDP. Comparing the current deficit to the last 20 years, it's clear that the pandemic had a significant impact, causing a sharp increase in the deficit. However, recent projections indicate that the deficit is expected to remain relatively high compared to the historical average. **How does the U.S. deficit as a percentage of GDP compare to other European nations, Russia, and China?** The U.S. deficit as a percentage of GDP is currently around **6.28%**. This means the U.S. government is spending more than it earns. Comparatively, here's how some other nations stack up to European nations and to Russia and China: - European Union: 3.5% - Italy: 7.4% - France: 5.6% - Spain: 4.8% - Russia: 1.4% - China: 3.9% **Who holds our debt?** As of the end of 2023, about 70% of the U.S. national debt is held by domestic entities, which include American individuals, institutions, and the Federal Reserve. The remaining 30% is held by foreign governments and investors. The top three foreign creditors are: 1. Japan: Holds about 15% of the U.S. debt. 2. China: Holds about 5% of the U.S. debt. 3. Other foreign investors: Including countries like Ireland, Luxembourg, and Belgium, collectively hold about 4% of the U.S. debt. **How much would be cut from the deficit if the tax rate for the top 50% of wage earners went up by 5%?** To estimate how much would be cut from the deficit if the tax rate for the top 50% of wage earners went up by 5%, we need to consider a few factors: 1. **Current Deficit**: The U.S. deficit for the fiscal year 2024 was approximately **$1.83 trillion**. 2. **Current Tax Rate**: The top 50% of wage earners are currently taxed at an average rate of **14.9%**. 3. **Revenue Increase**: A 5% increase in the tax rate would mean the new tax rate would be **19.9%**. Assuming the top 50% of wage earners contribute nearly 98% of federal income taxes, we can estimate the additional revenue generated: - **Current Revenue**: Let's assume the top 50% of wage earners currently contribute **$2.2 trillion** in taxes (based on IRS data). - **Additional Revenue**: A 5% increase of $2.2 trillion would generate **$110 billion** in additional revenue. So, increasing the tax rate for the top 50% of wage earners by 5% could potentially reduce the deficit by **$110 billion** annually or only .32% of the total annual debt.