The federal government added $83 billion to the national debt in the first month of fiscal year 2023, according to the Congressional Budget Office (CBO), a rate of $2.7 billion in new debt per day that puts the government on track for another $1 trillion deficit. This year.
While the new debt accumulated in October is substantial, it is well below borrowing levels seen in recent years during COVID. The $83 billion represents half the amount of borrowing seen in October 2021 and reflects the gradual reduction in emergency spending that was approved to deal with the pandemic.
Only seven of the past 25 months have had deficits below $100 billion or with a budget surplus, and nine of those months have had deficits above $200 billion.
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The CBO’s October numbers report also looked at fiscal year 2022 and noted that sectors of government that dealt directly with COVID spent about $1.3 trillion less in 2022 than in 2021. For example, the government spent $486 billion less on refundable tax credits in 2022, $375 billion less on unemployment compensation, $300 billion less on small business loans and $138 billion dollars less on aid to state, local and tribal governments.
However, some expenditures have increased, notably at the Ministry of Education. This department recorded nearly $400 billion in additional spending to pay President Biden’s student loan.
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Net interest on the national debt also jumped by more than $100 billion, as rising interest rates increased the government’s borrowing costs. The government spent $534 billion to service debt in fiscal year 2022, and budget watchers say that figure is likely to skyrocket.
Biden has bragged about his ability to reduce the budget deficit, which is the amount the government borrows each year to cover expenses. The budget deficit in 2022 fell to $1.4 trillion from $2.8 trillion in 2021.
However, budget hawks note that spending is still well above pre-pandemic levels and debt interest payments alone could soon become a $1 trillion annual expense.
“The debt is expected to continue to climb as we head into another year of a $1 trillion deficit,” said Maya MacGuineas, chair of the Committee for a Responsible Federal Budget. “And that’s assuming Congress doesn’t make it worse.”
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Some additional expenses are on the immediate horizon. For example, Congress is expected to spend tens of billions of dollars to prop up Medicare by January 1, 2023, after which Medicare physician reimbursements will plummet and dramatically limit healthcare choices for seniors. .
MacGuineas said Congress needs an “emergency plan of action” that first holds the line on new borrowing for the rest of 2022 and then takes action to reduce the $31 trillion national debt. dollars.
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The government is about to hit the debt ceiling, which is just below $31.4 trillion. When that level of borrowing is reached, the government will take what it calls “extraordinary measures” to limit borrowing and stay below the ceiling.
Republicans have hinted at an interest in cutting spending as part of a deal to raise the debt ceiling if they win control of the House and/or Senate in the midterm elections. today.
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