- The federal government ended its fiscal year in September.
- Wrapping up a year in which some thought the shortfall could exceed $2 trillion, the United States had an imbalance of $1.695 trillion, or about $320 billion.
- The budget report comes out the same week that Biden asked Congress to allocate $105 billion for “national security priorities.”
Janet Yellen, U.S. Secretary of the Treasury, participates in the Global Infrastructure and Investment Forum in New York, September 21, 2023.
Swimming pool | Via Reuters
The U.S. Treasury announced Friday that the federal government ended its fiscal year in September with a deficit of just under $1.7 trillion.
Wrapping up a year in which some thought the shortfall could exceed $2 trillion, the United States had an imbalance of $1.695 trillion, an increase of about $320 billion, or 23.2%, over fiscal year 2022.
The huge deficit came as revenues fell by $457 billion from a year ago and spending fell by just $137 billion. Outlays for that year amounted to $6.134 trillion.
The budget shortfall adds to the staggering US debt total, which stood at $33.6 trillion at the beginning of the week. The deficit level was eased somewhat when the Supreme Court invalidated President Joe Biden’s efforts to cancel billions in student loan debt.
That number has increased by more than $10 trillion since the first quarter of 2020, when the Covid-19 pandemic forced the government on a spending spree to offset the damage to the economy.
Of last year’s government spending, about $659 billion went to net interest on accumulated debt, compared with $475 billion in fiscal year 2022.
Treasury Secretary Janet Yellen said the administration is “committed to addressing the challenges facing our long-term fiscal outlook” and identified several measures she believes will reduce the deficit over the next decade.
“The U.S. economy remains resilient despite global headwinds,” Yellen said. “Previous expectations that the United States would fall into recession within 2023 have not been confirmed.”
Debt financing has become much more expensive over the past year as the Federal Reserve has raised benchmark interest rates to combat inflation. The central bank raised the main interest rate by 5.25 percentage points, to which government bond yields responded. 10-year Treasury bonds are flirting with a yield of 5%. By 2020, this percentage was less than 1%.
The budget report comes the same week that Biden asked Congress to allocate $105 billion for “national security priorities,” including $61 billion for Ukraine as well as humanitarian aid in Israel and Gaza.
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