The federal government just ran the largest November budget deficit in history.
And it managed this feat even with a 9 percent increase in government receipts.
The November budget shortfall came in at $314.01 billion, according toย the Monthly Treasury Statement. That was 26 percent higher than the November 2022 deficit.
Just two months into fiscal 2024, the federal government has run up $380.58 billion in red ink. This follows on the heels ofย the third-largest annual budget deficit in history.
The U.S. government took in $274.83 billion in revenue. That was up from $252.11 billion in November 2022, bucking the trend of generally declining government receipts,
The federal governmentย enjoyed a revenue windfall in fiscal 2022. According to aย Tax Foundation analysis of Congressional Budget Office data, federal tax collections were up 21 percent. Tax collections also came in at a multi-decade high of 19.6 percent as a share of GDP. But CBO analysts warned at the time that it wouldnโt last.ย And it didnโt. Government receipts fell by 9.3 percent in fiscal 2023.
Government tax revenue will decline even faster as the economy spins intoย a recession.
But the real problem is on the spending side of the ledger.
The Biden administration blew through $588.84 billion in November, up 18 percent from November 2022. That pushed total spending to nearly $1.06 trillion through the first two months of fiscal 2024.
This underscores the fact that the fundamental issue isnโt that the U.S. government doesnโt have enough money. The fundamental problem is that the U.S. government spendsย too much money. Despite the pretend spending cuts,ย the debt ceiling dealย didnโt address that problem. Even with the new plan in place,ย spending will go up. No matter what you hear about spending cuts, the federal government constantly finds new reasons to spend more money.
Government spending is already historically high. That means big budget deficits will continue and the national debt will mount.
The national debt blew past $33 trillionย on Sept. 15. As of Dec. 12, it stood at $33.85 trillion.
Most people seem to think the excessive spending, the growing deficits, and the national debt donโt matter, but somebody has taken notice. Last month,ย Moodyโs Investor Service lowered its outlook on U.S. government creditย from โstableโ to โnegative.โ This could be a prelude to a downgrade in the countryโs AAA credit rating.
THE INTEREST PROBLEM
This rapid increase in the national debt is happening during a time of sharply rising interest rates. This is a big problem for a government that primarily depends on borrowing to pay its bills, and is likely one of the reasons thatย the Federal Reserve has surrendered to inflation. The borrow-and-spend US government canโt function in a high interest rate environment.
Uncle Sam spent $79.92 billion in interest expense to finance the national debt in November. That was more than national defense ($70 billion) and more than Medicare ($79 billion). The only higher spending category was Social Security.
Net interest expense, excluding intragovernmental transfers to trust funds, was $72 billion, still more than the amount spent on national defense.
A lot of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and has to be replaced by bonds yielding much higher rates. The weighted average interest rate on the governmentโs $26 trillion of outstanding Treasury securities rose to 3.10 percent in November. That compares with a weighted average rate of 2.22 percent in November 2022.
Rising interest rates drove interest payments to over 35 percent as a percentage of total tax receipts in fiscal 2023. In other words, the government is already paying more than a third of the taxes it collects on interest expense.
The bottom line is interest payments will continue to quickly climb much higher unless rates fall.
Financial analystย Jim Grant doesnโt think that will happen. He thinks weโre at the beginning of a generational bear market in bonds that will keep rates higher for the next several decades โ no matter what the Federal Reserve does.
That means the only way out of this fiscal death spiral is significant spending cuts.
You probably shouldnโt hold your breath.
- The Federal Government is Not the Boss - March 8, 2026
- One Step is a Step Too Far - February 28, 2026
- Freedom Isn’t Granted: It’s Exercised and Defended - February 18, 2026