Congressional Budget Office revealed that the federal government’s budget deficit hit $1.6 trillion in first 10 months of fiscal year 2023, doubling last year’s federal government incurred deficit.
Current Director of the Congressional Budget Office, Phillip L. Swagel. | Congressional Budget Office
The Congressional Budget Office (CBO) announced that the federal government’s budget deficit more than doubled through the first 10 months of the current fiscal year compared to last year.
In the latest Congressional Budget Office budget review, the federal deficit was $1.6 trillion in the first 10 months of fiscal year 2023 which is over the $726 billion deficit the federal government incurred in the same period last year according to Congressional Budget Office.
The Congressional Budget Office noted that federal spending was 10% higher during the first 10 months of fiscal year 2023, while tax revenues came in 10% lower, which resulted for the deficit to widen. The Congressional Budget Office now expects the federal deficit for fiscal year 2023 to be about $1.7 trillion which is $200 billion larger than the reported budget in May.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, stated that with only two months left in the fiscal year, the government has borrowed an average of $5.3 billion daily, already surpassing the deficit of the previous year. Despite the pandemic being over and the economy appearing to grow steadily, the deficit for this year and the next is projected to be 50 percent larger compared to pre-pandemic times.
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The Congressional Budget Office revised their deficit projections after the U.S. government’s credit rating was lowered by Fitch Ratings.
This downgrade from AAA to AA+, could result in higher borrowing costs for the government. Fitch has downgraded its outlook on the United States due to concerns regarding governance and fiscal policies. Fitch pointed out that partisan disputes over financial matters and the debt limit have contributed to this erosion of governance.
In the Budget and Economic Outlook: 2023 to 2033 published by the Congressional Budget Office, deficits fluctuate over the next 4 years, for around 5.8 percent of GDP. However, starting in 2028, they grow steadily, says Congressional Budget Office.
The Congressional Budget Office projected deficit in 2033 is 6.9 percent of GDP which is considerably higher than the average deficit of 3.6 percent of GDP observed over the past five decades.
