The Smoke and Mirrors of Government Spending in 2023
When the Treasury Department released its final monthly statement for the U.S. government’s 2023 fiscal year, it reported the government’s budget deficit was $1.695 trillion. That is an increase of $320 billion from the deficit of $1.375 trillion it reported at the end of its 2022 fiscal year.
The Treasury also reported the U.S. government’s total spending fell from $6.27 trillion to $6.13 trillion from FY 2022 to FY 2023.
A number of nonpartisan budget analysts, however, are crying foul at this part of the Treasury’s accounting. The Committee for a Responsible Federal Budget identifies the smoke-and-mirrors they say obscures the accurate picture of a significant increase in government spending:
Although federal spending officially fell by $137 billion (2 percent) between FY 2022 and FY 2023, this was due to an accounting quirk where the President’s announced student debt cancellation was recorded as a cost in FY 2022 – before being implemented – and then as a savings in FY 2023 after the Supreme Court ruled it illegal.
Removing this accounting quirk, effective spending rose from $5.9 trillion in FY 2022 to $6.5 trillion in FY 2023. Spending on Social Security increased by $135 billion (11 percent) to $1.4 trillion, largely due to the 8.7 percent cost-of-living adjustment. Medicare spending increased by $93 billion (12 percent) to $848 billion and Medicaid spending increased by $24 billion (4 percent) to $616 billion, both due to higher payment rates and growing enrollment, partially offset by unwinding COVID relief. Federal Deposit Insurance Corporation spending increased by $101 billion to $92 billion from facilitating the resolution of bank failures in the Spring of 2023. Interest costs also grew by a massive $184 billion (39 percent), from $475 billion to $659 billion because interest rates were significantly higher in FY 2023 than in FY 2022.
To get a more accurate picture of the bottom line for the federal budget deficit, CFRB’s budget analysts removed the student loan accounting “quirk” from the U.S. Treasury’s FY 2022 and FY 2023 reports. The nonpartisan think tank finds the federal government’s effective budget deficit in FY 2022 was $1.0 trillion, which doubled to $2.0 trillion in FY 2023.
No matter where they fall on the political spectrum, Americans are not well-served by the accounting tricks used to support President Biden’s unlawful student loan relief scheme. How many more shenanigans like it are still hiding in the federal budget?