The US budget deficit is nearly $1.7 trillion, an increase of 23%.

The U.S. Treasury Department announced on October 20th the final figures for fiscal year 2023 (ending at the end of September), showing a budget deficit of $1.695 trillion, an increase of $320 billion (23%) compared to the previous fiscal year, Reuters reported.

The US Treasury Department building

If the Supreme Court does not overturn President Joe Biden's student debt forgiveness program, the budget deficit could increase by an additional $321 billion.

According to Reuters, declining revenue coupled with record-high spending on social security programs, health insurance, and federal debt interest payments contributed to the deficit.

Meanwhile, officials in President Joe Biden's administration say the deficit is due to a sharp decline in federal revenue, following a strong rebound after the Covid-19 pandemic. Federal revenue in fiscal year 2023 was $4.439 trillion, down 9.3% from fiscal year 2022, primarily due to a $456 billion drop in personal income tax revenue.

Profits from the Federal Reserve also fell by $106 billion as interest payments to banks increased.

Spending in fiscal year 2023 decreased by $137 billion (2%) compared to the previous fiscal year, to $6.134 trillion. This level would have been lower without the sharp increases in spending on pensions and health care benefits, and interest payments. The federal debt is over $33 trillion, and the U.S. paid a record $879 billion in interest in fiscal year 2023, a 23% increase.

Without US aid, Ukraine fears it will be unable to pay the salaries of civil servants and teachers.

In 2020 – the time when the Covid-19 pandemic broke out globally – the US budget deficit peaked at $3.13 trillion. In the following two years, the deficit gradually decreased but increased again in 2023.

The deficit in fiscal year 2023 was 6.3% of gross domestic product (GDP). The Congressional Budget Office warns that, based on current tax and spending laws, the US budget deficit will approach pre-Covid-19 levels before the end of the 2020s, potentially reaching $2.13 trillion by 2030 as interest payments, healthcare costs, and pensions rise.

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