Rep. Matt Rosendale, R-Mont., joined “Cavuto: Coast to Coast” to discuss Republicans’ ongoing difficulties in passing defense spending legislation as a government shutdown looms.
The U.S. government on Friday reported a $1.695 trillion fiscal 2023 budget deficit, up 23% from a year ago, as revenue fell and spending rose on Social Security, Medicare and record-high interest costs on the federal debt.
The Treasury Department said the deficit was the largest since a $2.78 trillion COVID-induced gap in 2021. It marks a sharp return to skyrocketing deficits after successive declines during President Joe Biden’s first two years in office.
The deficit comes as Biden is asking Congress for $100 billion in new aid and security spending, including $60 billion for Ukraine and $14 billion for Israel, as well as funding for U.S. border security and the Indo-Pacific region.
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The large deficit, which exceeded all deficits before the COVID-19 crisis, including deficits caused by Republican tax cuts passed under Donald Trump and as a result of the financial crisis years, is likely to further fuel Biden’s budget disputes with House Republicans over their spending demands heat up The cuts brought the US to the brink of insolvency under the debt ceiling at the beginning of June.
A deal to avoid a government shutdown over tougher spending-cutting demands from Republican hardliners led to the ouster of U.S. House Speaker Kevin McCarthy, and the party is still divided over who should lead it and is expected to face new negotiations The financial deadline in mid-November will be more difficult.
The Dome of the USA Washington, DC (Karen Bleier/AFP via Getty Images/File / Getty Images)
In September, the last month of the fiscal year, the deficit fell to $171 billion from $430 billion in September 2022.
“Declining revenues contribute significantly to the 2023 deficit and underscore the importance of President Biden’s enacted and proposed tax reform policies,” Treasury Secretary Janet Yellen and Shalanda Young, director of the Office of Management and Budget, said in a joint statement.
The 2023 budget deficit would have been $321 billion higher, but was reduced by that amount because the Supreme Court ruled Biden’s student loan forgiveness program unconstitutional. The ruling forced the Treasury Department to reverse a preemptive challenge to fiscal 2022 budget results that increased that year’s deficit.
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The fiscal year 2022 deficit was $1.375 trillion.
Taking into account the two one-time adjustments, the deficit would have been closer to $1 trillion last fiscal year and closer to $2 trillion this year, a Treasury official said.
The 2023 deficit marks an abrupt end to two years of falling deficits for Biden as COVID-19 spending slowed. The U.S. deficit peaked at $3.13 trillion in fiscal 2020 as the sharpest downturn since the 1930s sharply constrained tax revenues while spending on unemployment benefits, direct payments to consumers and aid to businesses peaked.
The U.S. government’s budget deficit rose to an all-time high of $1.7 trillion in the first six months of this fiscal year, nearly double the previous record, as another round of economic support checks boosted spending by billions of U.S. dollars in recent months dollar increased… (AP Photo/J. Scott Applewhite/File/AP Images)
But the Congressional Budget Office has warned that, based on current tax and spending laws, U.S. deficits will approach COVID-era levels by the end of the decade, reaching around $2.13 trillion in 2030, as interest, healthcare and pension costs rise.
In fiscal year 2023, total revenues fell $457 billion, or 9%, from fiscal year 2022 to $4.439 trillion, largely due to a decline in unretained individual income tax payments due to weaker performance of stocks and other financial assets amid rising interest rates is attributable.
Other revenue declines included a $106 billion drop in Federal Reserve earnings as interest paid on bank reserves ate up all portfolio earnings.
A pedestrian passes the Marriner S. Eccles Federal Reserve building in Washington, DC (Nathan Howard/Bloomberg via Getty Images/File / Getty Images)
Spending for fiscal 2023 fell $137 billion, or 2%, to $6.134 trillion from a year ago. Spending would have been more modest had it not been for the sharp rise in spending on retirement and health care for the elderly, as well as debt service costs.
Social Security spending rose 10% to $1.416 trillion due to cost-of-living adjustments for inflation, and spending on the Medicare senior health program rose 4% to $1.022 trillion.
Interest costs on more than $33 trillion in federal debt also rose sharply, rising 23% to a record $879 billion. Net interest payments, excluding domestic transfers to trust funds, rose 39% to $659 billion, also a record, according to a Treasury official.
The share of gross interest payments in gross domestic product was 3.28%, the highest since 2001, and the net share was 2.45%, the highest since 1998, the official said.
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Interest rates have skyrocketed over the past year and a half as the Federal Reserve has raised borrowing costs to curb inflation. The average interest cost on the Treasury’s outstanding debt was 2.97% in the last fiscal year, up from 2.07% a year earlier.