Americans Shrug Off Historic Debt Surge

Pedestrians sit at a bus shelter at Pennsylvania Avenue and 22nd Street NW where an electronic billboard and a poster display the current U.S. national debt on July 5, 2023 in Washington, D.C. (Photo by Jemal Countess/Getty Images for the Peter G. Peterson Foundation)

While much attention has been (justifiably) focused on the brutal attacks in Israel, the Congressional Budget Office (CBO) quietly released some alarming numbers. The budget deficit for the 2023 fiscal year—which concluded September 30—topped a staggering $2 trillion. This not only doubled the 2022 budget deficit, it also became the largest single-year deficit increase in American history, outside of the temporary emergencies of both World Wars, the Great Recession, and the 2020 pandemic.

In fact—outside of those aforementioned emergencies—this year’s budget deficit is the largest in American history, equaling 7.7 percent of GDP. Those earlier emergency-driven deficits could each be justified as an unavoidable yet temporary one-time cost that a growing economy could absorb gradually. By contrast, today’s structural deficits are substantially more perilous because they are projected to continue growing larger essentially forever. Simply put, never before has Washington run such large deficits during relative peace and prosperity.

(Necessary caveat: While a deficit of $1.69 trillion has been commonly reported, President Joe Biden’s declared-and-then-blocked student loan bailout induced a federal accounting glitch that essentially classified more than $300 billion in 2023 spending within the 2022 budget totals. Yet the actual federal debt held by the public rose by $2 trillion in 2023, and this article’s figures remove that accounting glitch).

The culprits should be well known by now. CBO reports that Social Security costs rose by 11 percent last year, and Medicare spending (adjusted for timing shifts) leaped by 18 percent. And that is just the beginning, as the retirement of 74 million baby boomers will drive annual Social Security and Medicare shortfalls from $600 billion to $2 trillion within a decade. Decades of tax cuts have capped tax revenues, and an inflation-based revenue surge in 2022 gave way to a $455 billion revenue decline in 2023. 

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