The Deficit Was $2.1 Trillion Over Past Year
June 8, 2023
The federal budget deficit totaled $2.1 trillion over the past 12 months, up 50 percent from the $1.4 trillion deficit in Fiscal Year (FY) 2022 and more than twice as large as the deficit prior to the beginning of the pandemic.
The 12-month rolling deficit is also $170 billion higher than it was last month, thanks to a $236 billion deficit in May of 2023, compared to $66 billion last May. Compared to a year ago, total nominal spending is up 11 percent to $6.6 trillion and revenue is down 6 percent to $4.5 trillion.
As a share of the economy, deficits have totaled 8.1 percent of Gross Domestic Product over the past year, over three times the historical average of 2.5 percent and three percentage points higher than 2019.
Spending has totaled 25.3 percent of GDP over the past year. Rising spending on net interest, Medicare, Social Security, and student debt cancellation have more than offset declining spending on pandemic relief.
Meanwhile, the recent temporary revenue surge has ended, with revenue falling from the near-record 19.6 percent of GDP in FY 2022 down to 17.2 percent of GDP over the past 12 months – equal to the historic average and almost exactly what the Congressional Budget Office projected it would be back in 2018.
With deficits expanding, substantial policy change will be needed to bring spending and revenue in line. The roll-off (and possible reversal) of student debt cancellation and implementation of the Fiscal Responsibility Act are likely to help reduce deficits in the near-term, but much more action will be needed to stem the unsustainable medium- and long-term trajectory of the debt.
Policymakers should work together to get the economy and our fiscal health back on track.
Committee for a Responsible Federal Budget1900 M Street NWSuite 850Washington, DC 20036
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I don’t believe there is any interest in cutting spending in the country. Therefore taxes will have to go up.
The payroll taxes will have to rise to the amounts needed by 2034. Income taxes will need to rise probably about 50% over current levels or that can be adjusted downward by increasing corporate taxes. Probably a combination of both will be preferable.
Failing to increase taxes sufficiently, we can continue to increase the debt and eventually test the level at which it will implode the economy. Japan seems to be humming along with a much greater debt to GDP than us so we can see what happens to them.
While we’re at it, I’ve often heard that the debt can be inflated away so that can be tested also during the time of great spending.
We can just sit back and watch.
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The thing to remember about all these increases in percent to the federal budget deficit is that these involve numbers with 12 zeros after them. Even one percentage point is a very, very big number. But this is only the federal budget deficit which means the government is spending more money than it is collecting. The budget deficit feeds into the overall national debt.
Now that the debt ceiling has been removed until 2025, nobody will talk about our national debt of 31,908,000,000,000 and rising faster than I can type. Politicians want to forgive student loans, well who is going to forgive the US National debt which at over $95,266+ per person. Babies that will be born today are already saddled with over $95K in government debt and it is rising.
Until Congress gets it’s spending under control, there is no hope of reducing our national debt. Empires have fallen because they went broke. It is now a race between the US moral decay and our spending habits on what will bring the end to the United States.
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Dwayne. The last paragraph of your comment is 100% ON POINT !!!!
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