A $2 Trillion Deficit for Fiscal 2023

Washington is girding for a spending showdown, as Republicans and Democrats strategize on how to get more of what they want from a divided Congress. But whatever happens in the political drama, the budget reality not to forget is that the deficit for the fiscal year that ends this month is officially projected to be $1.7 trillion, or about $13,500 for every U.S. household.

The estimate is from the Congressional Budget Office’s monthly report for August, and it’s even worse than that headline. President Biden was saved from an uglier official figure only because the Supreme Court reversed his extra-constitutional plan to forgive student loans, producing what the CBO calls “outlay savings” to “reflect the Supreme Court’s ruling.” Ignore that and the deficit would be $2 trillion.

The big news in the budget details is that payments on federal debt are soaring as interest rates rise. CBO says interest payments have climbed $149 billion in the first 11 months of the fiscal year to $644 billion, up 30% from last year. Debt payments are getting close to spending on national defense of $692 billion, if you can believe it. A third of the current deficit is going to pay interest on money borrowed for previous spending blowouts.

In the first 11 months of fiscal 2023, total outlays were up 3%, including 11% on Social Security benefits, 18% on Medicare, and 5% on Medicaid. Such increases more than offset drops on Covid relief and a lapsed expansion of the child tax credit.

Keep in mind that Mr. Biden’s soaring deficit comes despite a growing economy, and that spending on his Inflation Reduction Act and infrastructure law will accelerate in coming years. Total receipts are down 10%, year over year, owing to slower growth as well as $106 billion in lower remittances to the Treasury from the Federal Reserve as the central bank’s interest expenses rise “above its income.”

Remember when Mr. Biden claimed to have reduced the deficit by $1.7 trillion? That was always a con, but now he can truthfully claim to be the $2 trillion deficit man.