The Deficit Was $2.1 Trillion Over Past Year
The federal budget deficit totaled $2.1 trillion over the past 12 months, up 50 percent from the $1.4 trillion deficit in Fiscal Year (FY) 2022 and more than twice as large as the deficit prior to the beginning of the pandemic.
The 12-month rolling deficit is also $170 billion higher than it was last month, thanks to a $236 billion deficit in May of 2023, compared to $66 billion last May. Compared to a year ago, total nominal spending is up 11 percent to $6.6 trillion and revenue is down 6 percent to $4.5 trillion.
As a share of the economy, deficits have totaled 8.1 percent of Gross Domestic Product (GDP) over the past year, over three times the historical average and three percentage points higher than 2019.
Spending has totaled 25.3 percent of GDP over the past year. Rising spending on net interest, Medicare, Social Security, and student debt cancellation have more than offset declining spending on pandemic relief.
Meanwhile, the recent temporary revenue surge has ended, with revenue falling from the near-record 19.6 percent of GDP in FY 2022 down to 17.2 percent of GDP over the past 12 months – in line with the historic average and almost exactly what the Congressional Budget Office projected it would be back in 2018.
With deficits expanding, substantial policy change will be needed to bring spending and revenue in line. The roll-off (and possible reversal) of student debt cancellation and implementation of the Fiscal Responsibility Act are likely to help reduce deficits in the near term, but much more action will be needed to stem the unsustainable medium- and long-term trajectory of the debt. Policymakers should work together to get the economy and our fiscal health back on track.