Policy Backgrounders

US National Debt and Federal Budget Negotiations

January 10, 2024

Trusted Insights for What’s Ahead™

Concerns regarding the US national debt and deficits are top-of-mind for US CEOs as Congress works to finalize a budget agreement for FY2024 and avoid a damaging government shutdown.

• In The Conference Board’s C-Suite Outlook for 2024, US CEOs ranked the US national debt and deficits as the top geopolitical risk to their business operations. The US national deficit reached $1.7 trillion in FY2023, bringing the total US national debt to $34 trillion as of November 2023. The cost of servicing the US national debt has risen rapidly to $879 billion, a $162 billion (23 percent) increase from FY2022. Rising debt service costs continue to consume the discretionary budget and can cause higher interest rates and borrowing costs for the public and private sectors, weaken investment, and erode the standard of living through diminished economic growth.
• In an effort to prevent a government shutdown, Congressional leaders have agreed to a topline government spending number of $1.59 trillion ($886 billion for defense and $704 billion for nondefense programs) for FY2024. Adding roughly $69 billion from side deals on nondefense spending agreed at the time the Fiscal Responsibility Act (FRA) was enacted last year brings FY2024 total government spending to $1.66 trillion.
• This topline number aligns with the agreement between Congress and the President outlined in the FRA from the Spring, which sparked anger among House Republican conservatives and contributed to Speaker McCarthy’s ouster, while also including $16.1 billion in concessions from Democrats. Concessions to the Speaker included $10 billion in IRS cuts and the clawback of $6.1 billion in unused COVID funds.
• Congress must still pass the 12 appropriations bills that fund the federal government by its self-imposed deadlines of January 19 and February 2 or risk a government shutdown.