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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 February 2023, which was the fifth month of fiscal year (FY) 2023.
The federal government ran a deficit of $262 billion in February 2023, a $45 billion change from the deficit of $217 billion that was recorded in February 2022. Spending was up by $18 billion relative to last year. The largest increases occurred for Social Security, Medicare, and interest on the public debt; each category was at least $8 billion higher than the amounts recorded last year. However, reductions in income security payments ($23 billion decrease) and other programs partially offset higher spending elsewhere in the budget. Total revenues fell by $28 billion, driven by a $37 billion decline in collections of individual income taxes which was partially offset by higher collections of social insurance and retirement receipts.
The cumulative deficit so far this year is $247 billion above last year’s level. However, because October 1 fell on a weekend in 2022, certain federal payments were shifted into September, leading to a $63 billion decrease in outlays for this fiscal year. Without that effect, the deficit for FY23 to date would be $310 billion above last year’s total to date.
For the first five months of FY23, total outlays were $2.5 trillion, $175 billion higher than the same period in the previous year (not accounting for timing shifts). Growth in outlays was largely driven by an $81 billion reduction in receipts from the auction of licenses to use the electromagnetic spectrum (which are recorded as offsets to spending), a $66 billion increase in interest on the public debt and $49 billion more in Social Security spending. Partially offsetting those increases were the expiration of advance payments for the child tax credit (which were recorded as outlays) as well as declines in spending by the Public Health and Social Services Emergency Fund, and by the Small Business Administration.
Through the first five months of FY23, total revenues have decreased by $72 billion compared to the previous year. The largest decreases were in individual income taxes, which fell by $95 billion, and remittances from the Federal Reserve, which were down by $47 billion. Partially offsetting those effects was a $49 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.