Mounting Deficits Mark the U.S.’s Road to Ruin

October 29, 2023

by Daniel Lacalle Mises.org

According to the U.S. Treasury, year-end data from September 2023 show that the deficit for the full year 2023 was $1.7 trillion, $320 billion higher than the prior year’s deficit. As a percentage of GDP, the deficit was 6.3%, an increase from 5.4% in FY 2022. This means that the United States will likely post the worst GDP growth excluding debt increases since 1929, or, in other words, that the country is in a recession disguised by bloated deficit spending.

This disastrous result shows that the Keynesian science fiction of the public sector multiplier does not work. The Biden administration increased taxes, but revenues declined. Governmental receipts totaled $4.4 trillion in FY 2023 (16.5 percent of GDP), 9.3% lower than in 2022 and below the budget projections. This decline is mostly due to $456 billion in lower individual income tax receipts and $106 billion in lower deposits of earnings by the Federal Reserve due to higher interest rates, according to the Treasury.