Federal Budget Deficit Grew to $2 Trillion in FY 2023
By: Kyle Hulehan (Tax Foundation)
Bidenomics...........it's what's for dinner...........and lunch.........and breakfast
S E E D E D C O N T E N T
October 12, 2023October 12, 2023By: William McBride
Outside of the pandemic years, this year's federal deficit is the highest in U.S. history. Preliminary figures from the Congressional Budget Office (CBO)The Congressional Budget Office (CBO) provides nonpartisan analysis to the U.S. Congress on federal economic and budgetary matters. for fiscal year (FY) 2023 indicate the federal deficit grew to about $2 trillion, nearly $1.1 trillion larger than the prior year after excluding the effects of the administration's student debt cancellation plan that the Supreme Court struck down in June. Only 2020 and 2021 saw larger deficits, at $3.1 trillion and $2.8 trillion, respectively.
Social Security payments increased 11 percent, from $1.2 trillion in FY 2022 to $1.3 trillion in FY 2023, while Medicare payments increased 18 percent, from $751 billion to $846 billion, and Medicaid payments increased 4 percent, from $592 billion to $616 billion. Interest payments on the debt increased 33 percent, from $534 billion in FY 2022 to $711 billion in FY 2023. Defense spending grew 7 percent, from $727 billion to $774 billion. If this rate of increase continues, interest on the debt will overtake spending on defense next year.
TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. collections totaled $4.4 trillion in FY 2023, down $455 billion, or 9 percent, from last year's record haul of $4.9 trillion. The largest decline was for individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. es, which fell $456 billion, or 17 percent, to $2.2 trillion, apparently due in large part to a drop in capital gains taxA capital gains tax is levied on the profit made from selling an asset and is often in addition to corporate income taxes, frequently resulting in double taxation. Capital gains taxes create a bias against saving, leading to a lower level of national income by encouraging present consumption over investment. revenue as the stock and housing markets deflated. CBO also points to "higher-than-anticipated claims" of the Employee Retention Tax CreditA tax credit is a provision that reduces a taxpayer's final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer's tax bill directly. , a pandemic-era program that spawned a cottage industry until the IRS halted new claims last month due to rampant fraud. Individual income tax refundA tax refund is a reimbursement to taxpayers who have overpaid their taxes, often due to having employers withhold too much from paychecks. The U.S. Treasury estimates that nearly three-fourths of taxpayers are over-withheld, resulting in a tax refund for millions. Overpaying taxes can be viewed as an interest-free loan to the government. On the other hand, approximately one-fifth of taxpayers underwithhold; this can occur if a person works multiple jobs and does not appropriately adjust their W-4 to account for additional income, or if spousal income is not appropriately accounted for on W-4s. s were $129 billion higher this year than last, a 52 percent increase.
In contrast, payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. es grew 9 percent to $1.6 trillion in FY 2023, reflecting growth in wages and jobs.
Corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. es were roughly flat, falling $5 billion, or 1 percent, to $420 billion, despite the introduction of the new minimum tax on book incomeBook income is the amount of income corporations publicly report on their financial statements to shareholders. This measure is useful for assessing the financial health of a business but often does not reflect economic reality and can result in a firm appearing profitable while paying little or no income tax. and the stock buyback tax, both part of the Inflation Reduction Act (IRA) enacted last year. The Joint Committee on Taxation (JCT)The Joint Committee on Taxation (JCT) is a nonpartisan congressional committee in the United States that assists both the House and Senate with tax legislation. The JCT is chaired, on a rotation, by the Chair of the Senate Finance Committee and the Chairman of the House Ways and Means Committee. predicted the new taxes would raise about $40 billion in FY 2023, but implementation challenges led the IRS to delay enforcement until further guidance is released. The IRA also provided 22 green energy tax credits, some of which may be claimed by corporations, and JCT's most recent estimates indicate the credits would reduce tax revenue (from both corporations and individuals) by about $15 billion in FY 2023.
Other receipts dropped $124 billion, or 35 percent, to $232 billion in FY 2023. The drop primarily reflects a near-zeroing out of remittances from the Federal Reserve (from $107 billion in FY 2022 to less than $1 billion in FY 2023), as higher interest rates caused the central bank's interest expense to offset its income (the Federal Reserve pays interest to banks and other institutions on their reserve balances). Customs duties also fell $20 billion due to a reduction in imports.
In sum, the federal budget continues on a perilous course. While tax revenue has increased about 28 percent since the pre-pandemic year 2019, spending has increased about 46 percent, and the deficit has more than doubled to $2 trillion. Annual deficits are headed towards $3 trillion over the next few years and interest expense is set to consume a growing share of the federal budget. Already this fiscal year, interest expense reached 16 percent of all revenue collected, the highest level since 1996. The bond market is signaling that interest expense could go much higher, leading to an unprecedented cost of servicing the debt. Now would be a good time for our political leaders to present a coherent plan for dealing with the debt problem before it becomes an urgent crisis.
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But, but, but 4.9 GDP............................idiots
Yep. Bidenomics in action folks.
Time for the top 1% to start paying their taxes.
The rest of us sure have to.
And we are facing another shutdown while millions are being sent to Ukraine ($75 billion since the Russian invasion) and Israel ($14 billion pledged so far).
Who controls Federal spending?
People need to understand how our system works. When dealing with budgets, spending, taxation, and debt we must first look at Congress. And not just the current Congress, but the history of congresses.
A PotUS champions his positions, makes recommendations, and has the option to veto. That is power, but it is not even close to absolute. Focus first on the congresses because it is Congress that has the predominant control on the purse strings.
Pretty good rundown on that process HERE .
Info on Biden's 2024 Budget Request HERE .
I'm trying to find info on the records showing the Presidents budget request vs. what Congress has actually appropriated each year. That would be an interesting comparison.
I believe tig understands all that perfectly fine. Why did you feel the need to point that out?
It is funny (and predictable) that some people will not read your links. Since your first link corroborates what I posted, here is a summary from the link:
One might even summarize the above with:
Right, Texan and JustJim?
I think Freewill is trying to emphasize my point. I appreciate it.
Leave me off of your snark commentary. Just because I vote up a comment doesn't mean I agree 100% with it. It means there is some merit to what is being posted. Knock it off please. You do that bullshit all the time. I know it must hurt your feelings that another doesn't think like you but cry by some other method.
Thank you so much.
Indeed I was and thanks. Some folks find fault in no matter what I post, even when I agree with them. I don't agree enough I suppose, or inject enough partisan venom. Ah well, such is the blogosphere.
That's great. Fantastic. Glad to hear it.
The only one crying here is you.
Venom?
That's what I said...
Do you agree with this or not?:
Do you agree with this or not?:
Take a stand.
I do not hold that position.
So are you going to comment on the content of my post or simply engage in personal attacks?
Do you believe the PotUS is predominantly in control of spending or do you believe Congress is predominantly in control of spending?
Then you understand that it is Congress that is predominantly in control of spending. The PotUS can champion, recommend and veto but Congress holds the hammer.
And that also means that you know that spending is a function of a series of congresses because the decisions made by one Congress often goes into effect in the future.
Thus the spending we see is in part legacy (from prior congresses) and part current (from the current Congress).
This is what you know, right?
I am not telling you what you understand; you stated that you understand this and I am acknowledging that.
So do you understand this or not? The fact that you are objecting makes me think that you disagree.
Interest on debt (inflation) also plays it's part in the deficit. Something Congress should be working on rather than fake impeachment inquiries.
Yes the English meaning of those words (in context) is exactly what I stated. They are acknowledging what you have stipulated.
Your continued objection makes me think that —in spite of the fact that you declare understanding— you do indeed disagree with what I posted @3.1.12
If you disagree then make your case.
I asked you a question. I also asked you to make your case if you disagree with my post @3.1.12
If you cannot bring yourself to answer this dead-on-topic question then stop making accusations about me as a deflection. When you make accusations, I will respond in defense.
Okay, then logically you agree with my post @3.1.12
Nothing left to discuss.
Hell, Texan, nobody could possibly know from your prior posts.
But you have finally posted clarity. You agree with my post @3.1.12.
So, again, there is nothing left to discuss.
Note how you keep perpetuating this nonsense. You are the one making allegations, not me.
I simply asked for clarity. We are done. You should move on.
So since you and I are in full agreement, why do you suppose so many seem to think a current PotUS has so much control over spending?
I would rather have a discussion about the topic. Thus I have asked a question about the topic.
Since you and I are in full agreement, why do you suppose so many seem to think a current PotUS has so much control over spending?
Indeed, good breakdown! Found an interesting article HERE on the history of the CBO.
Still trying to find a yearly history of the Presidential Budget Proposal vs. actual Congressional Appropriation in a given fiscal year. I think that would be fascinating to see. I have seen that the President typically provides his proposal in late Feb or March, but can also modify it as the year progresses, as events occur, or new legislation is passed.
Okay, you do not want to opine on why so many seem to think a current PotUS has so much control over spending.
Do you think it was sensible for our framers to make Congress the body that has predominant constitutional control over the purse strings?
No opinion to offer on our framer's choice to make Congress the body with predominant constitutional control over the purse strings?
Do you think we should give a PotUS more spending power since right now the PotUS can only lobby, recommend, and veto (or not) spending legislation? Is that enough power? Does Congress have too much power?
Spending and borrowing seems to be out of control. Is this predominantly the fault of the Legislative or the Executive branch?
Indeed, As the article points out,
THAT is scary!
Okay. Since my questions are all spot on topic and you have opinions, you have the floor.
What are your opinions? If you want just one question, how about:
Spending and borrowing seems to be out of control; is this predominantly the fault of the Legislative or the Executive branch?
Why do you insist on me answering questions for you? If I did you would simply complain.
The topic is the federal budget deficit. Who is predominantly responsible is certainly an important question.
Given you understand this topic and have opinions, you have the floor to topically, thoughtfully opine.
This question is good:
Spending and borrowing seems to be out of control; is this predominantly the fault of the Legislative or the Executive branch?
But I have others.
You keep referring me to this truly ridiculous post:
My response is this:
I am asking you what you think. I am presenting topical questions that should be of direct interest to anyone participating in this discussion. But you apparently have no interest in discussing the topic and would rather I just tell you what you think.
Fascinating.
Well, I prefer to not try to get inside your mind. So go ahead and speak for yourself.
Let's try it again. I think this question is decent, but I can offer others if this is too much for you to handle:
Spending and borrowing seems to be out of control; is this predominantly the fault of the Legislative or the Executive branch?
When people ask a question, the normal protocol is for the recipient to deliver the answer.
It would be absurd for the person asking the question to also answer it.
Given you continue to post in this seed, one would naturally expect that you have opinions on spot-on-topic questions. You have told us all that you have opinions yet you keep referring me to a post where you ask me to tell you what you think.
That is very strange.
Maybe you can handle this one:
Who do you think would be the best PotUS (if you could pick the individual) for dealing with our budget deficit and what, specifically, do you think that individual should do to address this growing problem?
You have stated that you have opinions on this topic. Enlighten us:
Who do you think would be the best PotUS (if you could pick the individual) for dealing with our budget deficit and what, specifically, do you think that individual should do to address this growing problem?
If you do not like this question, I have others.
I am asking questions on the topic and giving you the floor. Seems odd that you keep insisting that I tell you what to think.
Here are the questions I have posed. You apparently have no answer for any of them:
I can offer easier questions. We can always go back to the basics:
Who has predominant control of spending, the Executive or the Legislative branch?
You keep replying yet cannot seem to formulate an answer to even the most basic topical question.
Let's make it even easier:
What, in your opinion, are the powers of the Executive branch that can most influence annual spending limits (the budget)?
Amazing that you want someone to tell you what to say. You have an opinion, surely you can voice it. Given you keep responding with deflection after deflection, you clearly have plenty of time to kill. Why not put it to productive use and opine directly on the topic of this seed:
Try the opposite easy question:
What, in your opinion, are the powers of the Legislative branch that can most influence annual spending limits (the budget)?
Okay, an even easier inquiry:
How much blame should a sitting PotUS have for spending during his watch? Should the PotUS be blamed for all of it because he is ultimately in charge of the government? Or should the blame be proportional to the realistic control that he has?
Maybe you are more comfortable with partisan questions:
Is Biden's fault for spending under his watch the same as Trump's fault for spending under his watch? Are they both primarily to blame or would you think the blame falls more on the congresses during their terms?
You have no opinion on this?
You want me to try to read your mind?
Why do you need someone to tell you what you should believe? Engage in critical thinking, draw a conclusion, and express it. Of course, I recommend that you do enough thinking (and research) to be highly confident that you are on solid ground before making such a post.
But this topic is actually rather easy to research. And it is not complicated.
Besides, I have thrown some very slow, straight softballs. Some really easy questions for discussion.
How strange. You have written probably a dozen posts by now asking me to tell you what you believe and I have been encouraging you to do your own thinking and express yourself.
I have even provided numerous topical questions to serve a foundation for your opinion.
I think my questions are easy to understand and not difficult to answer. And they certainly are spot-on-topic.
Look, if you are concerned about being wrong then I already offered some good advice. In this topic, it is very easy to be on the right side of the truth. And if you are, your opinions are easily defended.
Yes, and thus you have declared yourself competent to discuss this topic.
Oh is that the problem? You think my questions are 'dumb'?
So in a seed discussing the federal budget deficit growth as it relates to the PotUS, you consider these to be 'dumb' questions:
How about a thoughtful response to at least one of the questions?
Well when you call my questions 'dumb' I do interpret that as you thinking my questions are 'dumb' and that you are not answering them because they are 'dumb'.
What then were you trying to say?
Yup, you have spent the day dodging on-topic questions with feeble and laughable excuses. You were not able to muster whatever was needed to discuss this topic thoughtfully.
Not that I am surprised you refused to take a stand; after all taking a clear stand is risky since one might be shown to be wrong.
You stated that you understood how government works. I said that was great and then with your professed knowledge as an assumption, posed thoughtful questions that would allow a thoughtful person to engage this topic.
You then illustrated, clear as a bell, just how far you would go in deflection rather than stand up and answer topical questions.
If you never commit, you can never be found wrong. Not an uncommon approach.
You refused to answer my questions. Did you notice?
Congress holds the purse strings.
Indeed
Whenever I tell my wife to tell me what to say or what I am thinking she understands exactly what I am saying. I guess some folks still don't get it even after you say it a dozen or so times.
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You were wrong.
As the executive, PotUS is responsible for government performing authorized activities at the lowest cost to the public. Congress establishes the limits on executive activity and amounts to be spent performing those activities.
The list of Congressional budget actions provided in @3.1 and @3.1.2 does not include the authorization step in the budget process. Congress goes through a formal review of authority for existing and requested executive activities before deliberating appropriations for those activities. Congressional authorization for executive activities determines how much flexibility the PotUS may exert over spending. In some cases Congressional authorization is a requirement to pursue specific executive activities. But quite often the Congressional authorizations allows executive judgement and control over engaging in activities and whether or not to spend money on activities.
Unfortunately the common practice in the executive bureaucracy is to 'use it or lose it'. The various agencies will spend to the limit of Congressional appropriations even though that was not the intent of Congress. The bad practice of 'use it or lose it' is entirely within the purview of PotUS. PotUS actually has the final say over Federal spending. That's why OMB, GAO, IRS, and the Treasury Dept. (among other agencies) are under the direction of PotUS.
Political responsibility and the ability to control are at odds. A PotUS is politically responsible for pretty much anything that happens on his watch. It is a ridiculous expectation by the public, but that is reality.
Holding a PotUS responsible for something does not mean a PotUS actually has the responsibility (per the CotUS) or that a PotUS has power that would allow him to exercise sufficient control over this something to effect a desired outcome.
Insane... We are not at war. There's no national health emergency, nor any other kind.
Full speed ahead to the entitlement crisis.
So you deny the reality of covid?
How about anthropogenic climate change?
Thankfully, ignorant far right-wing deniers will be the first to go.
Another "Biden accomplishment" for the list.
It's all about covid which Trump denied.
Trump is responsible for it getting so bad.
Trump is responsible for the cost.
So you deny the fact that Trump denied the reality of covid?
Sounds like a double dog denial or do you deny it?
Did you miss the part where the article states (and I quoted in 5): Outside of the pandemic years, this year's federal deficit is the highest in U.S. history.
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In other words, a trillion less than Trump's in 2020!
Covid
Which means?
[deleted]
Wasn't that one of the reasons Biden stated for a President to step down?
I write it up as another dementia related incident.
So it meant nothing then.
Got it.
Try again
An impossible dream:
He has been all along.
Would not accomplish anything.
The time frame makes Trump liable.
Biden inherited the results of Trump's idiotic policies.
Just like Trump inherited Obama's great economy which he claimed for himself and then ruined.
Which policies are those?
Anything Biden may have inherited from the Trump administration, Biden has compounded things and made them considerably worse since he has been in office.
I guess you missed the part of the article that stated: Outside of the pandemic years
I'm honestly surprised there was no stupid ass meme.
Give it time.
I just had a thought that would strike fear in the hearts of the ruling elite.
How about a return to the GOLD STANDARD.
In other words: No more printing money. No more devaluing the savings of the working class.
Deficits typically fall when the economy is strong and growing. With a deficit this high know, how high will it be when he have the next big crises (war/pandemic/market or bank collapse) ? Servicing the federal deck will continue to cost more as it grows and inflation grows. What will next years student loan buyout cost?
That is why Bill Clinton benefited from Reaganomics.
With a deficit this high know, how high will it be when he have the next big crises (war/pandemic/market or bank collapse) ?
Yup, it never gets paid off, we just go from crisis to crisis.
Servicing the federal deck will continue to cost more as it grows and inflation grows.
And nobody cares.
What will next years student loan buyout cost?
It is a vote getter though.
I care. Greatly. Trouble is, neither of the major parties seem to care.
That is true. I don't see how that debt is paid off. All I see is the people's savings being devalued.
The way our debt can be paid off is simple in concept but quite difficult to achieve.
Without substantially increasing our GDP, I see no escape from our debt.
By the way, I also advocate a very serious overall of spending to cut the waste that clearly exists. But no party benefits from this so it never gets done.
Yes, and only after tax dollars are chasing the available goods and service making is so government spending can theoretically be off the books without effecting the consumer economy except around the edges.
There was that and the tech bubble resulting from Al Gore’s invention of the internet.
I am not sure I understand your point.
Gross income is basically irrelevant as to the consumer markets for goods and services as there are a finite number of dollars (after tax net income dollars) at any given time chasing a finite amount of consumer goods and services. Taxes can go up or down with minimal effect on supply and demand for consumer goods.
Quantitative easing as practiced by the Fed can increase the money supply.
[✘]
This independent centrist cares about Trump fascism trashing America.
You find 9.2.8 to be a fascist?
That's hilarious...
Ans so wrong.
Sounds like we need to either freeze or drastically slow spending and get a pretty substantial boost in revenue.