U.S. budget deficit rises in FY 2023 amid surging interest rates

U.S. budget deficit totaled nearly $1.7 trillion in fiscal year 2023, which ended on September 30, as interest rates have been surging, the Congressional Budget Office (CBO) said in its Monthly Budget Review on Tuesday.

The federal deficit jumped by 28% between fiscal year 2022 and fiscal year 2023, from $1.375 trillion to $1.69 trillion, according to CBO estimates.

The deficit equaled 6.2% of GDP, up from 5.4% in FY 2022.

That increase, the CBO said, resulted from a combination of lower revenues and higher interest outlays.

Outlays for the largest mandatory spending programs - Social Security, Medicare and Medicaid - increased by 11%, to $2.8 trillion between them.

Net outlays for interest on the public debt rose by 33% to $711 billion - mainly because interest rates were significantly higher than they were in fiscal year 2022.

Defense spending rose 7%, to $774 billion. Total federal outlays, however, slipped 1.4% to $6.13 trillion.

Total receipts were in turn down by 9%, to $4.44 billion - due mainly to a 17% fall in income tax revenues, to $2.18 trillion.

At: https://www.cbo.gov/system/files/2023-10/59544.pdf

OMB Director Shalanda Young, and Steve Ricchetti, counselor to President Joe Biden, during debt ceiling talks with congressional Republicans this May.

The federal budget deficit rose 28% in FY 2023 - but was still 46% lower than its high point in FY 2020.

Federal income tax revenues fell 17%, while payroll taxes rose 9% - part of a gradual but longstanding shift from income taxes (49% of the total) to payroll taxes (36%) as leading sources of federal revenues.