The US government on Friday posted a $1.695 trillion budget deficit in fiscal 2023, a 23% jump from a year earlier as revenues fell and spending on Social Security, Medicare and record high interest costs on the federal debt rose.
The Treasury Department said the deficit was the largest since the $2.78 trillion gap fueled by the COVID-19 in 2021. It marked a major return to a deficit that increased after consecutive declines during President Biden’s first two years in office.
The deficit comes as Biden asks Congress for new foreign aid and security spending, including $60 billion for Ukraine and $14 billion for Israel, along with funding for US border security and the Indo-Pacific region.
The huge deficit, which exceeds all pre-Covid deficits, including those caused by Republican tax cuts passed under Donald Trump and from the financial crisis years, is likely to fuel Biden’s fiscal battle with Republicans in the House of Representatives, who demand spending cuts push the US to the brink. defaulted in early June over the debt ceiling.
The deficit comes as President Biden asks Congress for new foreign aid and security spending, including $60 billion for Ukraine and $14 billion for Israel. Al Drago / Pool via CNP / SplashNews.com
A deal to avert a government shutdown over demands for deeper spending cuts from Republican hardliners led to the ouster of House Speaker Kevin McCarthy, and the party remains divided over who should lead them, who are expected to negotiate ahead of a new fiscal deadline in midyear. November is harder.
For September, the last month of the fiscal year, the deficit fell to $171 billion from $430 billion in September 2022.
“Falling revenues are a significant contributor to the 2023 deficit, underscoring the importance of policies enacted and proposed by President Biden to reform the tax system,” Treasury Secretary Janet Yellen and Office of Management and Budget Director Shalanda Young said in a joint statement.
The 2023 fiscal deficit could be a larger $321 billion, but is reduced by this amount because the Supreme Court struck down Biden’s student loan forgiveness program as unconstitutional. The decision forced the Treasury to cancel an advance charge on fiscal 2022 budget decisions that increased that year’s deficit.
“Falling revenues are an important contributor to the 2023 deficit, underscoring the importance of policies enacted and proposed by President Biden to reform the tax system,” said Treasury Secretary Janet Yellen.REUTERS
The fiscal year 2022 deficit is $1.375 trillion.
Taking into account the two one-time adjustments, last fiscal year’s deficit would have been closer to $1 trillion and this year’s will be closer to $2 trillion, a Treasury official said.
Record interest cost
The 2023 deficit marks an abrupt end to two years of deficits for Biden as COVID-19 spending fades. The US deficit peaked in fiscal 2020 at $3.13 trillion as the worst recession since the 1930s severely constrained tax revenues while spending on unemployment benefits, direct payments to consumers and aid to businesses peaked.
But the Congressional Budget Office has warned that based on current tax and spending legislation, the US deficit will approach COVID-era levels by the end of the decade, reaching about $2.13 trillion in 2030 as interest, health and pension costs rise.
The budget deficit jumped 23% to $1.695 trillion from the previous year. Getty Images
For fiscal year 2023, total revenue fell $457 billion, or 9% from fiscal 2022, to $4.439 trillion, largely due to a decrease in non-withheld individual income tax payments amid worse performance in stocks and other financial assets when interest rates increase.
Other revenue declines include a $106 billion drop in Federal Reserve income as interest paid on bank reserves eats up any portfolio income.
Fiscal 2023 spending is down $137 billion, or 2% from the previous year to $6.134 trillion. Spending would be more modest if not for large increases in spending on retirement and health care benefits for the elderly and in debt service costs.
Biden talked about his administration’s plans to protect Social Security and Medicare and lower health care costs in February.AP
Social Security spending rose 10% to $1.416 trillion due to cost-of-living adjustments for inflation, and spending for the Medicare senior health care program rose 4% to $1.022 trillion.
Interest costs on the more than $33 trillion in federal debt also rose sharply, up 23% to $879 billion, a record. Net interest payments, excluding intergovernmental transfers to trust funds, rose 39% to $659 billion, also a record, according to a Treasury official.
Gross interest payments stood at 3.28% as a share of gross domestic product, the highest since 2001, and the net share at 2.45% was the highest since 1998, the official said.
Interest rates have soared over the past year and a half as the Federal Reserve raised borrowing costs to slow inflation. The average cost of interest on outstanding Treasury debt was 2.97% last fiscal year, up from 2.07% the year before.
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Source: thtrangdai.edu.vn/en/
