The Deficit Hit $1.8 Trillion in Calendar Year 2023

The federal budget deficit totaled $1.8 trillion in calendar year (CY) 2023, up 5 percent from the fiscal year deficit of $1.7 trillion and 20 percent from the CY 2022 deficit  of $1.4 trillion. Removing the effects of student debt cancellation, which was ruled illegal, the CY 2023 deficit was $2.1 trillion. As a share of the economy, the deficit was roughly 6.5 percent of Gross Domestic Product (GDP), almost twice as large as in CY 2022, or 7.7 percent excluding student debt effects.

 The 12-month rolling deficit has been growing since November of last year, driven by rising nominal spending and declining revenue. Spending totaled 23.1 percent of GDP in 2023 (23.8 percent excluding student debt) and revenue totaled 16.6 percent of GDP. Last calendar year, spending was 24.4 percent of GDP (22.3 percent excluding student debt), and revenue had temporarily surged to 18.9 percent.

As we recently showed, rising spending and declining revenue have lead to a substantial deterioration in our fiscal situation, with debt approaching record levels as a share of the economy. Lawmakers will need to bring spending and revenue more closely in line in order to keep debt from rising dramatically. A bipartisan fiscal commission could help them to negotiate a plan to reduce deficits and tackle our mounting national debt.