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Every month the U.S. Treasury releases data on the federal budget, including the current deficit. The following contains budget data for June 2023, which was the ninth month of fiscal year (FY) 2023.
The federal government ran a deficit of $228 billion in June 2023, a $139 billion increase from the deficit of $89 billion that was recorded in June 2022. However, because July 1, 2023, fell on a weekend, certain payments that would have occurred then were shifted into June. Excluding the effect of that shift, the deficit would have been $139 billion in June 2023, and the year-over-year difference would have been a $53 billion increase.
Including the effect of the timing shift, spending was up by $96 billion relative to last year, and revenues fell by $42 billion. The largest increases in spending occurred for Medicare ($73 billion), interest on the public debt ($28 billion), and the Department of Housing and Urban Development ($19 billion), which was due to a downward revision related to previously issued loans for housing. Other categories that saw spending grow by more than $15 billion compared with June 2022 were Income Security, veteran’s benefits, and national defense. On the revenue side, the largest sources of decline were individual income taxes ($52 billion), corporate income taxes ($11 billion), and remittances from the Federal Reserve ($10 billion).
This year’s cumulative deficit is $878 billion above last year’s level. However, because October 1 fell on a weekend in 2022, certain federal payments were shifted into September (the previous fiscal year), leading to a $63 billion decrease in outlays for this fiscal year. Conversely, this month’s aforementioned timing effect increases this fiscal year’s outlays by $86 billion. Without those effects, the deficit for FY23 to date would be $855 billion above last year’s corresponding total.
For the first eight months of FY23, total outlays were $4.8 trillion, $455 billion higher than the same period in the previous year (not adjusting for timing shifts). The largest categories of growth in outlays were interest payments ($141 billion larger in 2023), Medicare ($113 billion), higher spending for Social Security ($98 billion), and a reduction in receipts from the auction of licenses to use the electromagnetic spectrum (which are recorded as offsets to spending and are down by $81 billion). Partially offsetting those increases were the expiration of advance payments for the child tax credit (which were recorded as outlays) and spending by the Treasury on pandemic relief to state, local, tribal, and territorial governments.
Through the first eight months of FY23, total revenues have decreased by $423 billion compared to the previous year. The largest decreases were in individual income taxes, which fell by $442 billion, and remittances from the Federal Reserve, which were down by $92 billion. Partially offsetting those effects was a $118 billion increase in payroll taxes.
Since the financial crisis in 2008, debt held by the public has nearly tripled relative to the size of the economy and is projected to grow even more in the future. Debt and deficits are on an unsustainable upward trajectory. With the new Congress officially in session, legislators are encouraged to work with the Biden Administration to create bipartisan solutions to improve the country’s fiscal outlook.