US deficit doubles as Biden asks for more Ukraine funding
Washington’s federal budget deficit essentially doubled in the government’s latest fiscal year as President Joe Biden’s administration continued to ramp up spending despite slumping tax revenue, a new US Treasury Department report has shown.
Government spending in excess of tax receipts totaled $1.7 trillion in the 2023 fiscal year, ended on September 30, up from $1.37 trillion in the preceding 12 months, the Treasury Department said on Friday. However, those figures were skewed by Biden’s failed effort to cancel student loan debts, making the 2022 deficit appear larger than it actually was and understating the 2023 total.
Excluding hypothetical costs and gains from the loan program, which the US Supreme Court blocked from being implemented, the deficit jumped to about $2 trillion in fiscal 2023 from less than $1 trillion a year earlier. With federal spending exceeding tax revenue for more than 20 straight years, US government debt has ballooned to $33.6 trillion, up nearly $6 trillion just since Biden took office in January 2021.
“We are a nation addicted to debt,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. She added that with the economy growing and unemployment at a historic low, this should have been a time to “instill fiscal responsibility and reduce our deficits. Instead, we now face the prospect of paying more to finance the debt we already incurred, let alone the trillions of dollars we are projected to borrow over the coming decade.”
In fact, with interest rates rising, the cost of servicing the federal government’s debt is on course to exceed the nation’s defense budget by next year, according to the Tax Foundation, a nonpartisan policy group in Washington. Net interest costs surged to $659 billion in fiscal 2023, up 39% from a year earlier, while defense spending rose less than 7%, to $775.9 billion.
US tax receipts dropped by 9.3% in the latest fiscal year, to $4.4 trillion. Spending on entitlement programs rose sharply, partly because the government boosted Social Security payouts after the US inflation rate surged to a 40-year high. Social Security payments jumped 11%, to $1.3 trillion. Medicare costs climbed 18%, to $846 billion, while Medicaid payments rose 4%, to $616 billion.
The latest deficit figures come to light at a time when Biden is pressing for more funding from Congress to fund Ukraine’s conflict with Russia. The White House on Friday requested approval for $106 billion in emergency spending, mostly for aid to Ukraine and Israel. The package includes $61.4 billion for Kiev.
US lawmakers previously approved $113 billion in Ukraine aid, but House Republicans have increasingly pushed back against prolonging the conflict. US House Speaker Kevin McCarthy was voted out of his leadership post earlier this month, the first such congressional ouster in US history, reportedly after some of his fellow Republicans heard that he had promised Biden a Ukraine aid bill following passage of a stopgap spending measure that prevented a government shutdown.
Treasury Secretary Janet Yellen downplayed the rising US government debt, emphasizing that Biden planned to reduce future deficits largely by requiring rich people to pay more taxes. She also dismissed concerns that Washington can’t afford to deal with the Ukraine crisis and the Israel-Hamas war at the same time. “America can certainly afford to stand with Israel and to support Israel’s military needs, and we also can and must support Ukraine in its struggle against Russia,” she told Sky News on Monday.
