New data released from the nonpartisan Congressional Budget Office (CBO) shows an increase in the federal budget deficit of $200 billion in the fiscal year 2023 compared to a year ago. The figure undercuts assertions made by President Joe Biden about how much his administration has reduced the deficit.
According to the CBO’s monthly budget review, released Wednesday, during the first four months of fiscal year 2023, which commenced October 1, 2022, the federal deficit was at $459 billion — up substantially compared with the same October-January period in fiscal year 2022.
The federal revenue in the first four months of FY 2023 was also $43 billion lower than the previous year, primarily because of fewer remittances of profits from Federal Reserve banking institutions as short-term interest rates have risen and lower income tax receipts. In contrast, spending was up by $157 billion in the same period.
In President Biden’s Tuesday evening State of the Union, he claimed, “In the last two years, my administration has cut the deficit by more than $1.7 trillion — the largest deficit reduction in American history.” But Biden’s claims of deficit reduction excluded the impact of the expiring Covid-19 pandemic relief measures and how they achieved the reduction.
The United States ran a record-breaking shortfall of more than $3.1 trillion in the fiscal year 2020 after trillions of dollars of new spending on temporary Covid-19 programs was approved by Congress on a bipartisan basis, including in the early weeks of pandemic-caused lockdowns under the CARES Act.
Several of those programs lasted into the following year when the president took office, and Democrats used their majority in Congress to act along party lines to pass the $1.9 trillion American Rescue Plan Act. The combined factors kept the FY 2021 deficit above $2.7 trillion.
The deficit narrowed more to almost $1.4 trillion in FY 2022 as additional pandemic spending concluded, although it remained the fourth-largest annual deficit in American history.
The deficit in FY2023 depends on tax receipts and federal spending over the next eight months; however, it is predicted to be around $1 trillion. It would be the U.S.’s eighth annual deficit of at least $1 trillion, all of which have happened since FY2009.
President Biden says the upcoming budget submission will suggest a further reduction in the deficit
Later in Biden’s address, he added that his forthcoming budget submission would suggest additional deficit reduction. “I can tell you, the plan I’m going to show you are going to cut the deficit by another $2 trillion,” said Biden.
A day before making the claims in the State of the Union address, President Biden missed the deadline for submitting his presidential budget request. The deadline is by the first Monday in February under the Congressional Budget Act of 1974.
This is the third consecutive year Biden has missed the deadline for supplying Congress with a budget blueprint.
Nevertheless, presidential budget requests usually are exercises in signaling political priorities instead of documents widely incorporated into lawmakers’ spending and budgeting plans.