Deficit Tops $1.7 Trillion As Interest Rates Surge

The Committee for a Responsible Federal Budget, October 10, 2023-  The Congressional Budget Office (CBO) today released its final Monthly Budget Review of Fiscal Year (FY) 2023, finding that the budget deficit totaled $1.7 trillion in FY 2023 and $166 billion in September. After adjusting for the enactment and reversal of the President’s student debt cancellation plan and timing shifts, the deficit more than doubled between FY 2022 and 2023, from $0.9 trillion to $2 trillion. At the same time, interest rates on U.S. Treasury securities have been surging, with the rate on the ten-year Treasury note closing above 4.7 percent last week – levels not seen since 2007. 

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget: 

After declining in recent years due to the pandemic ending, the deficit is now back on the rise, totaling $1.7 trillion in 2023 and more than double last year’s when you exclude the President’s now-overturned student debt cancellation and timing shifts. At a time when the economy is growing and unemployment remains near historic lows, this should have been a time to reduce deficits in order to help us better prepare to respond to future economic downturns or foreign crises.  

Instead, we’re now facing the prospect of new foreign conflicts at a time when interest rates have been surging and when we’ve already been borrowing at a pace normally reserved for times of emergency or recession. While it’s not clear that interest rates are surging because of our borrowing, we do know that these increases add additional stresses to our budget through higher interest payments, and reducing deficits would help stem their rise.  

With deficits doubling, interest rates surging, major trust funds on course to be exhausted in a decade, and new security threats emerging – everything is telling us it’s time to address the debt.  

The first step is to ensure that we don’t end the year with any kind of a borrowing binge, as we have seen in years past.  

Also, we should establish a bipartisan commission to put our debt trajectory on a more sustainable path, an idea which has been gaining bipartisan traction in Congress and among thought leaders.   

There are always convenient justifications for why we should borrow more – it is important, it is an emergency, it will pay for itself, trying to pay for it is just too hard. Those justifications are precisely what got us to this moment where our debt is dangerously high and growing, and economic and national security conditions leave us exceedingly vulnerable. We must change course.  

It will be tough, but we need to embrace the leadership and courage necessary to right our fiscal course.  

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