Tuesday, May 28

The U.S. budget deficit increases by 23%, surpassing $2 trillion due to rising expenses in Social Security and healthcare

In fiscal year 2023, the U.S. government has reported a substantial budget deficit of $1.695 trillion, marking a significant 23% increase from the previous year. This deficit growth is attributed to a drop in revenues and a surge in expenses related to Social Security, Medicare, and interest payments on federal debt.

The Treasury Department’s announcement reveals that this deficit is the largest since the pandemic-fueled $2.78 trillion gap in 2021. It signals a return to rising deficits after two consecutive years of decline during President Joe Biden’s initial two years in office.

The emergence of this budget deficit coincides with President Biden’s request to Congress for $100 billion in new foreign aid and security spending. This request includes $60 billion allocated to support Ukraine and $14 billion for Israel, in addition to funding designated for U.S. border security and the Indo-Pacific region.

This substantial budget deficit surpasses all pre-pandemic deficits, even those incurred as a result of Republican tax cuts enacted under the leadership of Donald Trump and during the financial crisis.

Furthermore, it is anticipated that this budget deficit will intensify President Biden’s fiscal confrontations with Republicans in the House of Representatives. Republican calls for spending reductions previously brought the U.S. to the brink of default in early June over the debt ceiling.

A last-minute deal to avert a government shutdown in the face of demands for deeper spending cuts from Republican hardliners resulted in the removal of U.S. House of Representatives Speaker Kevin McCarthy.

The Republican party remains divided over its leadership, which is expected to complicate negotiations leading up to a new fiscal deadline in mid-November.

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