Federal deficit effectively doubled in fiscal year 2023

The US budget deficit soared in fiscal year 2023, which will likely complicate Congress’ efforts to come to a federal spending deal before government funding runs out next month.

The deficit was $1.7 trillion for the most recent fiscal year, which ended September 30, according to Treasury Department data released Friday. That marks a $320 billion, or 23%, increase from the prior fiscal year.

However, the deficit essentially doubled to about $2 trillion if the impact of President Joe Biden’s federal student debt cancellation plan – which the Supreme Court struck down before it took effect – is not included.

The US Treasury Department listed the fiscal year 2022 deficit as $1.4 trillion because it took into account the cost of the president’s proposal. Without it, the deficit would have been closer to $1 trillion.

The nation’s hefty debt load will become even costlier in coming years as interest payments rise.

Also contributing to the growth in the deficit was a sizable drop in tax revenue. More than 40% of the jump was attributable to lower tax revenues.

In addition, increased spending on entitlement programs, including Social Security and Medicare, as well as on Medicaid accounted for just over a quarter of the widening in the budget shortfall.

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