The federal budget deficit was $1.2 trillion in the first eight months of fiscal year 2023 (FY23), nearly three times higher than it was in the first eight months of fiscal year 2022 (FY22), the Congressional Budget Office (CBO) reported Thursday.
From October 2022 through May, the FY23 federal deficit was $1.161 trillion - $735 billion higher than $426 billion shortfall recorded the previous year, even after $63 billion of expenditures were shifted into FY22.
In May alone, the federal deficit was $236 billion, CBO estimates - $170 billion higher than the amount recorded in May 2022. Revenues were $81 billion lower this May than they were in 2022. Outlays increased by $89 billion.
In the first eight months of FY23, revenues were 11% lower and expenditures were 9% higher than in the same period year-earlier. Receipts were $380 billion lower (a larger decline than the CBO says it expected), while expenditures were $355 billion higher.
“Outlays for the largest mandatory spending programs increased by a total of $193 billion,” a 12% increase, the CBO reports.
In particular, interest paid on the public debt rose by $112 billion (up 34%), “mainly because interest rates are significantly higher.”
Expenditures rose in other key categories, as well:
- Spending for Social Security benefits rose by $85 billion (11%),
- Medicare outlays increased by $77 billion (17%),
- Medicaid outlays increased by $31 billion (8%),
- Outlays of the Federal Deposit Insurance Corporation (FDIC) rose by $53 billion, as a result of facilitating the resolution of bank failures in the spring of 2023.
On the revenue side, federal government collection of individual income and payroll (social insurance) taxes together declined by $299 billion (10%) and collections of corporate income taxes increased, on net, by $5 billion (2%).
The CBO projects a deficit of $1.5 trillion for all of FY23, but cautions that it may be way off, because revenues have been lower than expected to-date and outlays could “differ significantly,” depending on whether or not the Supreme Court rules that President Joe Biden’s student loan debt cancellation is held to be constitutional.
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