According to comprehensive foreign media reports, data recently released by the US Treasury Department shows that the US federal government's fiscal deficit for fiscal year 2023 is $1.695 trillion, an increase of 23% compared to the previous fiscal year. Analysis indicates that the fiscal year 2023 deficit will exacerbate the already high debt of the United States, and may also exacerbate the financial struggle between President Biden and Republicans, making fiscal negotiations before mid November even more difficult.
According to Reuters, this is the largest deficit since the US $2.78 trillion deficit caused by the COVID-19 in 2021, marking that the US deficit has returned to an expanding state after the first two consecutive years of President Biden's administration. The main reasons for the sharp increase in budget deficit are a decrease in income, an increase in social security and medical insurance expenses, and a historic high in federal debt interest costs.
US Treasury Secretary Janet Yellen and Director of the Office of Management and Budget, Saranda Young, stated in a joint statement that "declining income is a significant factor in the 2023 deficit." Data shows that total revenue for the 2023 fiscal year was $4439 trillion, a decrease of $457 billion or 9% compared to the 2022 fiscal year, mainly due to poor performance of financial assets such as stocks, as well as rising interest rates, resulting in reduced non withholding personal income tax payments.
In addition, factors such as social security, healthcare insurance expenses, and rising federal debt interest costs have also led to this record high budget deficit. Due to the adjustment of living costs due to inflation, social security expenditure increased by 10% to $1.416 trillion; The expenditure on advanced healthcare plans for medical insurance increased by 4% to $1.022 trillion; The interest cost of federal debt has also sharply increased by 23%, reaching a record high of $879 billion.
At the same time, the 2023 fiscal year deficit has exacerbated the already high debt of the United States. According to the data of the Ministry of Finance, the net interest expense in fiscal year 2023 is about $659 billion, accounting for more than 10% of the annual fiscal expenditure, which indicates that the cost of debt financing in the United States has significantly increased against the background of the sharp rise in interest rates caused by the Federal Reserve's interest rate hike.
The Congressional Budget Office warned that, according to the current tax and expenditure laws, the U.S. fiscal deficit in 2030 will be close to the level of the COVID-19. With the increase in interest, healthcare, and pension costs, the fiscal deficit is expected to reach approximately $2.13 trillion.
Analysis indicates that such a huge fiscal deficit may exacerbate the financial struggle between US President Biden and Republicans, while the recall of former House Speaker Kevin McCarthy and the pending new round of House Speaker elections make fiscal negotiations before mid November even more difficult.