The federal budget deficit rose to $1.7 trillion for fiscal 2023, which ended in September, the Congressional Budget Office estimated on Tuesday.
The shortfall was $300 billion higher than the $1.4 trillion notched during the last fiscal year and comes as the Federal Reserve has driven interest rates up to their highest level since the turn of the century.
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Revenues fell by an estimated $455 billion, or by about 9% from last year, while spending was about 2%, or $141 billion, lower than last year, the nonpartisan budget office said.
“Revenues were smaller than in fiscal year 2022, particularly for nonwitheld income taxes and remittances to the Treasury from the Federal Reserve,” the report said.
The CBO noted that actions related to the Biden administration’s plan to cancel outstanding student loans for a large number of borrowers “resulted in largely offsetting changes to the deficit in 2022 and 2023.”
During the coronavirus pandemic, deficits swelled massively as the government approved several rounds of massive stimulus packages that gave money directly to individuals and businesses. For instance, the deficit in fiscal 2021 was $2.8 trillion.
President Joe Biden took credit during speeches and interviews for the subsequent shrinking of the budget deficit in 2022 as pandemic relief measures wound down, although that reduction was mostly not attributable to policy changes. Now, the newest numbers from the CBO show the deficit is beginning to go back up on Biden’s watch.
The higher interest rates are adding to the woes about the deficit. Borrowing costs have risen very quickly as the Fed keeps its interest rate target high. With higher rates, it means the government needs to pay more in interest in order to just that borrowing — a situation that has raised concerns about the country’s overall fiscal situation.
The U.S. has been grappling with a ballooning budget deficit and large amounts of national debt for years. It is estimated that the national debt is now at more than $33.5 trillion, about $2.5 trillion higher than it was just one year ago.
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Over the summer, the CBO projected that public debt would balloon to 107% of the country’s gross domestic product by 2029 and a whopping 181% by 2053.
“The United States faces a challenging fiscal outlook. If current laws generally remained unchanged, budget deficits and federal debt would grow in relation to gross domestic product over the next three decades,” the CBO said at the time.
