by Michael Maharrey, Schiff Gold:
The Biden administration ran a $1.695 trillion budget deficit in fiscal 2023. It was the third-largest deficit in US history. The only time the US government ran bigger deficits was during the COVID years of 2020 and 2021.
The government closed out the year with a $170.98 billion deficit in September, according to the final Monthly Treasury Statement of the fiscal year. That was more than double the projection.
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The deficit would have been even higher had it not been for an accounting move in August that reversed student loan forgiveness.
Last year, the Treasury expensed $333.65 trillion for the student loan forgiveness plan signed by President Biden. When the Supreme Court struck the scheme down, the Treasury had to reverse that expense. That means the actual shortfall was more than $2 trillion this year — $3 trillion higher than the official numbers.
The 2023 budget shortfall was bigger than any run during the Obama administration during the Great Recession, and yet this economy is supposedly strong. Typically, strong economies result in smaller deficits as tax revenue rises.
That was not the case in fiscal 2023. Federal Receipts fell by 9.3% to $4.44 trillion.
The federal government enjoyed a revenue windfall in fiscal 2022. According to a Tax Foundation analysis of Congressional Budget Office data, federal tax collections were up 21%. Tax collections also came in at a multi-decade high of 19.6% as a share of GDP. But CBO analysts warned it won’t last. And government tax revenue will decline even faster as the economy spins into a recession.
Treasury Secretary Janet Yellen was quick to blame falling tax receipts for the big deficit and said it underscores “the importance of President Biden’s enacted and proposed policies to reform the tax system.
But the big problem is on the spending side of the ledger. Strong receipts last year papered over the spending problem.
