The federal budget deficit reached $1.1 trillion in the first six months of fiscal 2023, the Congressional Budget Office (CBO) estimated in a report released Monday.
The estimate is $430 billion higher than the shortfall recorded during the same period last year, the office said, as spending rose 13 percent from the previous six-month window and revenues fell by 3 percent.
The government brought in $2 trillion in receipts in the six-month period beginning Oct. 1, the CBO said in the latest monthly budget review report. The figure is $73 billion lower than the same period in fiscal 2022.
Income and payroll tax receipts fell by 2 percent, or $33 billion, and remittances from the Federal Reserve fell from $61 billion to less than $1 billion.
“Higher short-term interest rates raised the central bank’s interest expenses above its income, eliminating the profits of most Federal Reserve banks,” the CBO said.
The recent estimates showed government spending also jumped over the six-month stretch when compared to the previous year, as outlays rose by 13 percent, or $357 billion. Overall, the CBO estimates total outlays hit $3.1 trillion between October and March.
The spike coincides with an estimated increase of 11 percent, or $132 billion, on net for the government’s largest mandatory spending programs, including Social Security and Medicare.
The CBO estimated a 10 percent increase in spending for Social Security benefits, amounting to $61 billion. The office credited the rise to “increases both in the number of beneficiaries and in the average benefit payment, which rose primarily because of cost-of-living adjustments.”
Outlays for Medicare also rose by an estimated 14 percent during the same period, or $49 billion, amid “changes in payment rates and in the types and quantity of care beneficiaries received,” the CBO said. The office also said Medicaid outlays climbed by 8 percent, or $22 billion, due to enrollment increases attributed to pandemic-era policy changes.
The report also pointed to other significant increases in spending, including net outlays on interest on the public debt, which it noted rose by 41 percent, or $90 billion, from the same period in fiscal 2022. The change was largely “because interest rates are significantly higher than they were in the first six months of fiscal year 2022,” the office said.
The office said outlays of the Federal Deposit Insurance Corporation also increased by $29 billion “when it invoked a ‘systemic risk exception’ in March in response to a pair of bank failures.” It also pointed to the ongoing nationwide student loan payment pause as a key contributor behind an increase of 75 percent, or $53 billion, to outlays for the Department of Education.