The federal budget deficit was $236 billion in May, according to the Congressional Budget Office’s latest monthly estimate, bringing the total for the first eight months of the fiscal year to nearly $1.2 trillion. By comparison, the budget deficit in the first eight months of fiscal year 2022 was $426 billion — a difference of roughly $735 billion.
Federal revenues were 11% lower in the first eight months of fiscal year 2023 compared to a year earlier, with the shortfall driven largely by smaller-than-expected tax payments from individuals. As the Committee for a Responsible Federal Budget notes, “the recent temporary revenue surge has ended, with revenue falling from the near-record 19.6 percent of GDP in FY 2022 down to 17.2 percent of GDP over the past 12 months.”
Outlays, on the other hand, were 9% higher compared to a year ago, pushing spending to 25.3% of GDP over the last 12 months.
The programs that saw big increases in spending include Social Security, in which spending rose by $85 billion (11%) compared to the same period a year earlier as more retires entered the system and a major cost-of-living adjustment took effect; Medicare, where outlays rose by $77 billion (17%); Medicaid, which saw a $31 billion (8%) increase as enrollment remained elevated due to temporary pandemic-era rule changes; and interest paid on the public debt, which rose by $112 billion (34%), driven by higher interest rates.
Over the past 12 months, the deficit totaled $2.1 trillion, a 50% increase from the 12-month deficit recorded a year earlier. As a share of the economy, deficits have averaged 8.1% of GDP over the last year, well above the historical average of 2.5%.
