Ready for some good financial news? You’ll have to wait. Things are not looking good after the first quarter of 2023. Higher spending and lower revenue intake produced a $1.1 trillion budget deficit in the first six months of the fiscal year 2023. This is according to a report released on Monday by the Congressional Budget Office.
The federal government spent $3.1 trillion and received $2.0 trillion between October 2022 and March 2023. This marks a 13% increase from the $2.8 trillion spent and a 3% decrease from the $2.1 trillion received during the same period in the fiscal year 2022.
That means that the first half of the fiscal year increased by $430 billion from the $668 billion deficit seen between October 2021 and March 2022.
Individual income and payroll taxes fell by $33 billion, and receipts from other sources decreased by $53 billion.
Increased spending largely emerged from $141 billion in additional Social Security, Medicare, and Medicaid costs, as well as an additional $90 billion for interest expenses on the public debt.
“Our fiscal challenges will only become more difficult the longer we wait to do anything,” Committee for a Responsible Federal Budget President Maya MacGuineas said in reaction to the report.
“In just five years, the national debt will surpass its record as a share of the economy set just after World War II, when we had no choice but to borrow to win the war. However, we’re in no such emergency now. It’s long past time that policymakers figure out a way to sustainably finance their priorities, not just add the costs to the national credit card.”
This information came just as negotiations between House Speaker Kevin McCarthy (R-CA) and senior Biden administration officials started on possible reductions to the budget deficit and an increase in the debt ceiling.
This is in response to a measure established by Congress that disallows the federal government from spending beyond the predetermined statutory limit of $31.4 trillion.
Janey Yellen, the Treasury Secretary, warned lawmakers that she was forced to implement “extraordinary measures” earlier this year to fund the government until early June. After this, the government will default on obligations.