Matthew Dickerson, Director of Budget Policy at the Economic Policy Innovation Center (EPIC), released the following statement regarding the Congressional Budget Office’s September Monthly Budget Review covering the final month of fiscal year 2023:
“This CBO report should be an alarm bell for Congress and the White House. Washington’s spending binge has produced 16.6 percent inflation since January 2021. With interest rates spiking, responsible leaders must get serious about controlling government spending.”
Background
- According to the CBO, FY 2023 outlays totaled $6.1 trillion and revenues were $4.4 trillion, resulting in a $1.7 trillion deficit.
- However, excluding the one-time accounting of the Supreme Court’s decision stopping President Biden’s attempted student loan debt cancellation, FY 2023 outlays would total $6.5 trillion and the deficit would be $2 trillion.
- In September 2022, President Biden announced the student loan cancellation scheme. Under the Federal Credit Reform Act rules, the taxpayer-financed subsidy costs of this loan cancellation were booked as higher government spending in FY 2022.
- After the Supreme Court struck down the plan, the $333 billion in lower outlays were accounted for in August 2023, reversing the deficit impacts from the prior year.
- In FY 2023, the national debt grew by more than $2 trillion, reaching $33.2 trillion.
- Compared to FY 2022, revenues are down 9 percent and outlays are 2 percent lower in FY 2023.
- The reduction in outlays is due to the student loan decision as well as the expiration of COVID and American Rescue Plan Act programs.
- In contrast, programs in the budget driving the long term fiscal imbalance all increased spending significantly in FY 2023 from FY 2022. Interest payments on the debt increased 33 percent, Medicare 18 percent, Social Security 11 percent, and Medicaid 4 percent.
- The deficit is much higher than what had been previously projected, as a result of actual spending being higher than originally estimated. These large deficits are despite revenues exceeding expectations and the large reduction in outlays recorded this year from the student loan decision.
- Actual FY 2023 outlays are $966 billion above what CBO originally projected when Biden first came into office ($5.2 trillion), revenues are $239 billion higher than projected ($4.2 trillion), with the deficit $727 billion higher than originally expected ($963 billion).
