Ten months into the 2023 fiscal year, a new budget deficit report is grim enough to make Joe Biden almost welcome discussion of his role in his son Hunter’s unseemly business activities.
This week, the nonpartisan Congressional Budget Office (CBO) released its official monthly budget report, and the deficit has more than doubled since this same point one year ago. Through July of last year, the deficit was $726 billion, but today it’s already $1.62 trillion.
But for an accounting abnormality that shifted some 2023 spending back into 2022, the deficit would’ve been even worse:
The federal budget deficit was $1.6 trillion in the first 10 months of fiscal year 2023, the Congressional Budget Office estimates – more than twice the shortfall recorded during the same period last year. Revenues were 10 percent lower and outlays were ten percent higher from October through July than they were during the same period in fiscal year 2022. Outlays in fiscal year 2023 were reduced by the shifting of certain payments – totaling $63 billion – from October 1, 2022 (the first day of fiscal year 2023), into fiscal year fiscal year 2022 because October 1 fell on a weekend. If not for those shifts, the deficit through July would have been $1.7 trillion (Emphasis added).
Throughout his presidency, Biden has falsely and repeatedly bragged that, “I’ve already cut the deficit by $1.7 trillion in my first two years in office,” when even left-leaning PolitiFact rules that any reduction was an accounting phenomenon flowing from the natural expiration of emergency Covid spending.
Indeed, it’s closer to the truth to say that the deficit would’ve been far worse had Biden been granted his full wish list. Remember, Senator Joe Manchin (D – West Virginia) enraged Biden and the far left by refusing to support Biden’s original $3.5 trillion “Build Back Better” proposal.
In any event, Biden owns far more responsibility for today’s skyrocketing deficit than he does for the anomaly of declining post-COVID deficits.
First, Biden’s spending and regulatory choices, including his “Inflation Reduction Act” itself, triggered steep price inflation that has persisted throughout his presidency. Although Biden regularly boasts about slowing inflation in the same deceptive manner that he boasts about reducing deficits, the fact is that it remains nearly three times as high as when he entered office.
In order to battle inflation that Biden once dismissed as “transitory,” the Federal Reserve has had to raise interest rates. Those higher interest rates not only punish consumers attempting to purchase homes or pay off their credit card debt, but they also deepen the deficit by raising the cost of paying interest on the federal debt. “Net outlays for interest on the public debt,” the CBO emphasizes in its latest report, “rose by $146 billion (or 34 percent), mainly because interest rates are significantly higher than they were in the first 10 months of fiscal year 2022.”
To put that in perspective, the $572 billion that we’ve spent on servicing the federal debt exceeds spending on Medicaid ($518 billion) and education ($251 billion), and nearly equals defense spending ($630 billion).
Making matters worse, interest rates are still on the rise, and much of the fiscal 2023 spending to date occurred when interest rates were lower nearly a year ago. Accordingly, it’s only going to get uglier between now and the end of this fiscal year on September 30.
Secondly, Biden’s policies have slowed an accelerating economy that he inherited as America exited the 2020 COVID shutdowns. In turn, that slowing economy has reduced incoming federal revenues due to more sluggish productive activity, as the CBO report acknowledges:
In the May 2023 baseline, CBO projected that receipts would be lower this year than they were in 2022, but the decline has been larger than expected. Receipts collected through July 2023, net of refunds, were about $300 billion less than CBO projected, mainly because of smaller-than-anticipated collections of individual and corporate income taxes. The reasons for the difference will be better understood as additional information becomes available; one factor may be smaller collections of taxes on capital gains and other types of income.
“Bidenomics” has thus slowed the U.S. economy, which in turn reduces incoming tax receipts, which in turn deepens the federal deficit.
More broadly, Biden’s surging deficits will increasingly crowd out defense spending amid a more perilous geopolitical environment, and ultimately programs like Medicare and Social Security on which many Americans depend.
While the conformist mainstream media slumbers and allows Biden to continue claiming to be a deficit-slashing president, the problem is rapidly increasing to alarming levels. Unless he voluntarily changes his policy course or is forced to do so, the danger to Americans and our global allies will only continue to grow.