Joint Statement of Janet L. Yellen, Secretary of the Treasury, and Shalanda D. Young, Director of the Office of Management and Budget, on Budget Results for Fiscal Year 2023
Joint Statement of Janet L. Yellen, Secretary of the Treasury, and Shalanda D. Young, Director of the Office of Management and Budget, on Budget Results for Fiscal Year 2023

WASHINGTON — U.S. Secretary of the Treasury Janet L. Yellen and Office of Management and Budget (OMB) Director Shalanda D. Young today released the final budget results for fiscal year (FY) 2023. The Biden-Harris Administration’s record of building the economy from the middle out and bottom up helped sustain a significant economic recovery and laid the groundwork for more durable and shared long-run growth over the last year. The deficit remains over $1 trillion lower than when President Biden took office, thanks in large part to a strong economic recovery facilitated by a historic vaccination program that allowed the responsible wind-down of emergency measures, and the President signed bipartisan legislation earlier this year that will reduce deficits by another $1 trillion over 10 years. Falling revenues are a significant contributor to the 2023 deficit, underscoring the importance of President Biden’s enacted and proposed policies to reform the tax system.

After atypically strong growth in revenues in 2022, driven by record-high capital gains receipts and the historic recovery from the pandemic, revenues in 2023 fell to 16.5 percent of gross domestic product (GDP), with individual and corporate receipts returning to lower levels in line with projections made after the passage of the Tax Cuts and Jobs Act of 2017. This drop in revenues was the primary driver of the increase in the deficit as a share of GDP. By contrast, non-interest spending did not meaningfully contribute to the increase in the deficit as a share of GDP.

From Day One, the Biden-Harris Administration has worked to build an economy from the middle out and bottom up. Our economy has added nearly 14 million jobs since President Biden took office, the unemployment rate has remained below 4 percent for the longest stretch in more than half a century, and the share of working-age Americans in the workforce is the highest in 20 years—all part of a recovery that has outpaced the rest of the world in its speed and breadth. President Biden has also signed into law significant deficit-reduction policies—including establishing a corporate minimum tax, lowering prescription drug costs, and cracking down on wealthy tax cheats—that will take full effect in coming years, and he has proposed another $2.5 trillion in savings over the next 10 years by making the wealthy and large corporations pay their fair share, closing tax loopholes, and cutting wasteful spending on Big Pharma, Big Oil, and other special interests.

“The U.S. economy remains resilient despite global headwinds. Previous expectations that the U.S. would fall into recession over the course of 2023 have not borne out. Our economy added over 300,000 new jobs in September and our GDP growth continues to surprise forecasters to the upside, even as inflation has come down significantly since last year,” said Secretary of the Treasury Janet L. Yellen. “The Biden Administration continues to focus on navigating our economy’s transition to healthy and sustainable growth. As we do, the President and I are also committed to addressing challenges to our long-term fiscal outlook. Earlier this year, President Biden signed into law over $1 trillion in bipartisan deficit reduction. And looking forward, the President has put forward a budget that reduces the deficit by another $2.5 trillion over the decade by asking the wealthiest Americans and big corporations to pay a fair share, while supporting our historic investments in America’s long-term economic strength.” 

“President Biden’s economic plan is building an economy that grows the middle class, all while reducing the deficit by ensuring the wealthy and large corporations pay their fair share and cutting wasteful spending on special interests,” said Shalanda Young, Director of the Office of Management and Budget. “Under his leadership, inflation is down, job growth remains strong, and unemployment is near record lows—we’ve shown that investing in our nation and achieving meaningful deficit reduction are not mutually exclusive. As our investments continue to deliver for working families and communities, the Administration looks forward to building on our progress with responsible investments that help grow our economy from the middle out and bottom up while strengthening our nation and its long-term budget outlook.”

Summary of Fiscal Year 2023 Budget Results

Year-end data from the September 2023 Monthly Treasury Statement of Receipts and Outlays of the United States Government show that the deficit for FY 2023 was $1.7 trillion; $320 billion higher than the prior year’s deficit. As a percentage of GDP, the deficit was 6.3 percent, an increase from 5.4 percent in FY 2022. 

The FY 2023 deficit was $31 billion lower than the baseline estimate of $1.73 trillion in the 2024 Budget published in March, and $26 billion higher than the baseline estimate of $1.67 trillion in the Mid-Session Review (MSR), a supplemental update to the Budget published in July. Differences were larger when compared to estimates incorporating enactment of the President’s proposed policies: $126 billion and $152 billion, respectively.         
 

Table 1. Total Receipts, Outlays, and Deficit (in trillions of dollars)
 

Receipts

Outlays

Deficit

FY 2022 Actual

4.896

6.272

1.375

    Percentage of GDP

19.3%

24.8%

5.4%

FY 2023 Estimates:

 

 

 

    2024 Budget

 

 

 

      Baseline

4.650

6.376

1.726

      Policy

4.802

6.372

1.569

    2024 Mid-Session Review

 

 

 

      Baseline

4.463

6.132

1.669

      Policy

4.587

6.130

1.543

FY 2023 Actual

4.439

6.134

1.695

    Percentage of GDP

16.5%

22.8%

6.3%

Note: Detail may not add to totals due to rounding. 
         

Governmental receipts totaled $4.4 trillion in FY 2023 (16.5 percent of GDP), less than Budget and MSR projections. Relative to FY 2022, receipts decreased by $457 billion, a sharp decrease of 9.3 percent. The decrease in receipts for FY 2023 compared to FY 2022 can be attributed to $456 billion lower individual income tax receipts as capital gains realizations fell and $106 billion lower deposits of earnings by the Federal Reserve due to higher interest rates. These reductions in receipts were partially offset by $131 billion higher social insurance and retirement receipts as a result of the continued strong labor market boosting wages and salaries. The majority of the year-over-year drop in receipts was projected in the Budget and MSR baseline forecasts.

Outlays were $6.1 trillion in FY 2023, $237 billion less than projected in the Budget and $4 billion more than projected in the MSR. Compared with FY 2022, outlays decreased $137 billion, or 2.2 percent. As a share of GDP, outlays fell from 24.8 percent to 22.8 percent. This decrease from FY 2022 in part reflects the Supreme Court’s decision in Biden v. Nebraska regarding certain student loan programs. Removing the effects of student debt forgiveness in both years, non-interest outlays as a share of GDP increased from 21.4 percent to 21.6 percent, and fell when excluding Social Security, Medicare, and Medicaid. Outlays decreased due to the expiration of the expanded Child Tax Credit, which decreased outlays by $103 billion, and decreased spending by Treasury from the Coronavirus Relief Fund by $103 billion. Spending by the Food and Nutrition Service, which includes the Supplemental Nutrition Assistance Program (SNAP) and Child Nutrition Programs, also decreased by $21 billion from 2022 due to the pandemic-related emergency allotments ending in March 2023. Outlays for some other categories of spending increased, including a $104 billion increase in Spectrum Auction and Spectrum Relocation outlays from 2022 due to lower spectrum auction receipts in FY 2023 (spectrum auction receipts are recorded as a negative outlay); a $134 billion increase in Social Security outlays from cost-of-living adjustments; a $101 billion increase in Federal Deposit Insurance Corporation (FDIC) outlays; and a $162 billion increase in outlays for interest on the public debt.

Total Federal borrowing from the public increased by $2.0 trillion during FY 2023 to $26.2 trillion. The increase in borrowing included $1.7 trillion to finance the deficit as well as $0.3 trillion in net borrowing related to other transactions such as changes in cash balances and net disbursements for Federal credit programs. As a percentage of GDP, borrowing from the public grew from 96 percent at the end of FY 2022 to 98 percent at the end of FY 2023.

To coincide with the release of the Federal Government’s year-end financial data, Treasury’s Bureau of the Fiscal Service (Fiscal Service) is continuing to publish Your Guide to America’s Finances (Your Guide). The Fiscal Service created Your Guide in 2019 to make Federal financial information transparent and accessible to all Americans. The latest version offers easy-to-understand explainer pages and makes content more accessible on mobile devices. The data in Your Guide is automatically updated throughout the year as new data becomes available, ensuring that the public has access to the latest financial information as quickly as possible. 

Below are explanations of the differences between FY 2023 estimates and the year-end actual amounts for receipts by source and outlays by agency.

Fiscal Year 2023 Receipts

Total receipts for FY 2023 were $4,439.3 billion, $147.8 billion lower than the MSR estimate of $4,587.1 billion. This net decrease in receipts was the net effect of lower-than-estimated collections of corporation income taxes, social insurance and retirement receipts, excise taxes, individual income taxes, and nearly all other sources of receipts. Table 2 displays actual receipts and estimates from the MSR by source.

  • Individual income taxes were $2,176.5 billion, $7.1 billion lower than the MSR estimate. The MSR estimates included a net $6.6 billion decrease in receipts from legislative proposals to increase the top marginal income tax rate for high-income earners, close Medicare tax loopholes and increase the Medicare tax for people making over $400,000 to improve Medicare solvency, and expand the child credit and make permanent full refundability and advanceability, all of which remain unenacted as of the publication of this document. Excluding the effects of legislative proposals, individual income taxes were $13.6 billion lower than the MSR estimate. This difference was the net effect of higher withheld payments of individual income tax liability of $8.0 billion, higher nonwithheld payments of $9.3 billion, and higher-than-estimated refunds of $30.9 billion. Relative to 2022, individual income tax receipts fell by $456 billion due largely to lower capital gains realizations, increased employee retention credit claims, and delayed tax payment deadlines due to natural disasters.
  • Corporation income taxes were $419.6 billion, $102.0 billion below the MSR estimate. The MSR estimates included $104.7 billion in receipts from legislative proposals to raise the corporate income tax rate to 28 percent, and revise the global minimum tax regime, limit inversions, and make related reforms, which remain unenacted as of the publication of this document. Excluding the effects of legislative proposals, corporation income taxes were $2.7 billion above the MSR estimate. This difference was largely due to lower-than-estimated refunds of $2.6 billion. Relative to 2022, corporation income tax receipts fell by $5 billion, the net effect of lower refunds and lower gross receipts in part because of delayed tax payment deadlines due to natural disasters.
  • Social insurance and retirement receipts were $1,614.5 billion, $24.5 billion lower than the MSR estimate. The MSR estimates included $23.9 billion in receipts from legislative proposals to increase the net investment income tax rate and additional Medicare tax rate for high-income taxpayers, which remain unenacted as of the publication of this document. Excluding the effects of legislative proposals, social insurance and retirement receipts were $0.6 billion below the MSR estimate. Relative to 2022, social insurance and retirement receipts increased by $131 billion due to increased wages and salaries.
  • Excise taxes were $75.8 billion, $10.6 billion below the MSR estimate. The MSR estimates included $2.2 billion in receipts from legislative proposals to increase the excise tax rate on repurchase of corporate stock; excluding these effects, excise taxes were $8.4 billion below the MSR estimates. Relative to 2022, excise tax collections decreased by $12 billion.
  • Estate and gift taxes were $33.7 billion, $0.9 billion below the MSR estimate. Relative to 2022, estate and gift taxes increased by $1 billion.
  • Customs duties were $80.3 billion, $2.0 billion below the MSR estimate. Relative to 2022, customs duties decreased by $20 billion.
  • Miscellaneous receipts were $39.0 billion, $0.8 billion below the MSR estimate. This was the net effect of lower-than-expected collections of various fees, penalties, forfeitures, and fines of $1.3 billion, partially offset by higher-than-expected deposits of earnings by the Federal Reserve System of $0.6 billion relative to the MSR estimate of $0. Higher short-term interest rates raised the Fed’s interest expenses, nearly eliminating the profits that the Federal Reserve System remits to the Treasury, but by less than estimated in the MSR. Relative to 2022, deposits of earnings by the Federal Reserve fell by $106 billion due to higher interest rates. Other miscellaneous receipts increased by $10 billion.

Fiscal Year 2023 Outlays

Total outlays were $6,134.4 billion for FY 2023, $4.3 billion higher than the MSR estimate. Table 3 displays actual outlays by agency and major program as well as estimates from the Budget and the MSR. The largest changes in outlays from the MSR were in the following areas:

Department of Agriculture — Outlays for the Department of Agriculture (USDA) were $228.9 billion, $33.4 billion lower than the MSR estimate. SNAP outlays in FY 2023 were approximately $13.7 billion below MSR estimates. Outlays in the Child Nutrition Programs were about $4.5 billion lower than MSR estimates. About $2.1 billion of this difference stems from September Keep Kids Fed Act of 2022 funds outlaying in 2024. Additionally, participation in the National School Lunch Program and School Breakfast Program was lower than the MSR estimates, which were based on FY 2022 levels of participation. Actual outlays for the Office of the Secretary in FY 2023 were $8.6 billion lower than the estimate in MSR. Transferred funding from the Commodity Credit Corporation borrowing authority for drought relief ($400 million) was not outlaid as expected. USDA also projected that $2.1 billion of the $2.2 billion for farmers and ranchers who faced discrimination from P.L. 117-169, the Inflation Reduction Act (IRA), would be outlaid in FY 2023; however, payments will not be distributed until calendar year 2024. Outlays from the Commodity Credit Corporation borrowing authority in FY 2023 were $1.9 billion lower than anticipated. The Livestock Forage Disaster Program experienced lower than anticipated outlays due to weather conditions being better than expected in certain regions. 

Department of Defense — Outlays for the Department of Defense were $775.9 billion, $6.2 billion higher than the MSR estimate. This difference is mostly due to higher-than-expected outlays for activities such as operation and maintenance contracts ($3.8 billion), Air Force procurement activities ($2.7 billion), and increased costs for Navy, Marine Corps, Air Force and Army National Guard personnel ($1.1 billion). These increased costs were partially offset by larger contributions from partner agencies for programs such as burden-sharing and foreign national employee separation pay.

Department of Education — Outlays for the Department of Education were -$41.1 billion, $7 billion lower than the MSR estimate. Outlays in the Elementary and Secondary Education account were $13.9 billion lower than the MSR estimate primarily due to lower than anticipated spending from the American Rescue Plan Act of 2021 (ARP) and other COVID-19 supplemental appropriations. Outlays in the Federal Family Education Loan Program Account were $3.2 billion higher than the MSR estimate because of the Fresh Start modification. Outlays in the Student Financial Assistance Account were $3.8 billion higher than MSR. The difference is partly driven by the inadvertent exclusion from MSR of total Federal Pell Grant program costs above the FY 2023 appropriation, about $1.5 billion. In addition, outlays were greater due to higher-than-expected participation in student financial assistance post-pandemic.

Department of Energy — Outlays for the Department of Energy (DOE) were $34.4 billion, $2.8 billion lower than the MSR estimate. The difference is predominately due to reimbursable activities for DOE’s assistance in administering the Environmental Protection Agency’s Methane Emissions Reduction Program that were not finalized at the time of the MSR. In addition, outlays for Office of Science activities were lower than expected due to the prioritization of spending IRA funds for ongoing facility upgrades and national laboratory infrastructure projects.

Department of Health and Human Services — Outlays for the Department of Health and Human Services were $1.7 trillion, $3.1 billion lower than the MSR estimate. Gross outlays for Medicare’s Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) trust funds were $2.8 billion and $4.0 billion higher than projected, due to slight variations that totaled less than one percent of Medicare HI and SMI spending. Outlays for Medicare prescription drug spending were $5.5 billion higher than estimated primarily due to lower levels of premiums paid directly to plans rather than through withholding from Social Security benefits. Outlays for Medicaid were approximately $6.5 billion lower than the MSR estimate, primarily driven by lower-than-anticipated per capita spending, potentially due to the phase out of the temporary COVID-19 Federal match (FMAP) increase. Actual outlays for cost-sharing reductions were $10.1 billion lower than projected in MSR due to the absence of an appropriations for Cost-Sharing Reductions. Actual outlays for the Public Health and Social Services Emergency Fund and the Centers for Disease Control and Prevention were $6.6 billion higher than projected in MSR due to faster-than-expected outlays of large contracts and grants funded with COVID-19 supplemental resources. 

Department of Homeland Security — Outlays for the Department of Homeland Security were $89 billion, $11.5 billion lower than the Budget estimate. The majority of the difference is attributable to the Disaster Relief Fund (DRF). DRF outlays were lower than MSR estimates because FEMA’s recoveries of prior year obligations were higher than expected. The remainder of the difference is attributable to delays in outlaying Operations and Support and Procurement, Construction, and Improvement funding across the Department. 

Department of the Interior — Outlays for the Department of the Interior (DOI) were $15.9 billion, $3.4 billion lower than the MSR estimate. The Department of the Interior’s anticipated end-of-year outlays were lower than MSR estimates due to various factors affecting multiple accounts across the Department. Notably, this includes the Bureau of Reclamation (BOR), the Energy Community Revitalization Program (ECRP), and the Office of Surface Mining’s Abandoned Mine Reclamation Economic Revitalization program (AMLER). BOR outlays were lower than anticipated in the MSR largely due to obligations being made late in the fiscal year for programs under the Infrastructure Investment and Jobs Act and the IRA, which provided less time than anticipated for amounts to outlay. The ECRP administers grants to States to address legacy pollution from abandoned oil and gas wells. The grants require that work be completed before payments are made, and many States were still completing work at the end of the of year. Additionally, this is a new program and there is a lack of historical data to inform the outlay estimates. The AMLER program administers grants to six States and three tribal nations to accelerate the remediation of AML sites with the goal of economic and community development end uses. Between MSR and the end of FY 2023, outlays lagged due to lower-than-estimated hiring capacity for State payment recipients which impacted processing times, resulting in lower than anticipated outlays.

Department of Justice — Outlays for the Department of Justice (DOJ) were $44.3 billion, $3.8 billion lower than the MSR estimate. The difference is predominately driven by DOJ grant accounts, the Federal Bureau of Investigation (FBI) Salaries and Expenses, and the Asset Forfeiture Program (AFP). Outlays for the DOJ grants were $2 billion lower than estimated, which is likely due to a slower-than-anticipated draw down of funds made available in prior fiscal years, similar to draw-down issues seen in previous years, in addition to the anticipation of certain awards being made in FY 2024 rather than FY 2023. Outlays for FBI Salaries and Expenses were $0.6 billion lower than estimated primarily driven by contract delays and protested contract awards. Outlays for AFP were $0.6 billion lower than estimated due to one-time fraud cases causing an unexpected lag in victims’ payments.

Department of the Treasury — Outlays for the Department of the Treasury were $1.1 trillion, $2.3 billion lower than the MSR estimate. Interest on the public debt, which is paid to the public and to trust funds and other Government accounts, was $14.6 billion higher than the MSR estimate. The difference was due primarily to higher-than-projected interest paid on Treasury bills (Treasury securities with a maturity of one year or less) held by the public. Net outlays for intragovernmental interest transactions with non-budgetary credit financing accounts were $7.9 billion lower than projected (higher net collections), including $13.3 billion in higher-than-projected receipts of interest from credit financing accounts, partly offset by $5.5 billion higher-than-anticipated interest paid to credit financing accounts. (Interest received from credit financing accounts is reported in Treasury’s aggregate offsetting receipts.) Outlays for individual and corporate refundable tax credits created in the CARES Act, the Consolidated Appropriations Act, 2021, and the ARP, along with coronavirus payments (e.g., Economic Impact Payments), were $10.0 billion lower than estimated at MSR due to delayed processing and other factors. This was partly offset by outlays for the refundable premium tax credit that were $2.9 billion higher than projected in MSR, driven in part by changes in enrollment in the individual health insurance marketplace.

Department of Veterans Affairs — Outlays for the Department of Veterans Affairs (VA) were $301.0 billion, $3.1 billion lower than the MSR estimate. The lower outlays were driven mostly by differences in Departmental Administration programs, which were $3.7 billion lower than the MSR estimate, and Benefits programs, which were $1.1 billion lower than the MSR estimate. Departmental Administration programs were lower than expected in part due to a strategic reset in Electronic Health Record Modernization deployment. Benefits programs were lower than expected primarily due to lower-than-anticipated spending out of the Cost of War Toxic Exposures Fund (TEF). The TEF was established by the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act of 2022, and FY 2023 was the first full fiscal year utilizing TEF funds. These differences were partially offset by outlays in the Veterans Health Administration that were higher than estimated at MSR.

Environmental Protection Agency — Outlays for the Environmental Protection Agency (EPA) were $12.6 billion, $2.0 billion higher than the MSR estimate. Outlays in EPA’s State and Tribal Assistance Grants Account were $1.8 billion higher than MSR due to an agreement with the Department of Energy to transfer $1.3 billion for the IRA Methane Emissions Reduction Program, which shows as an obligation for EPA. EPA was also able to obligate and expend additional funds from Bipartisan Infrastructure Law and IRA.

International Assistance Programs — Outlays for International Assistance Programs were $36.1 billion, $7.3 billion lower than the MSR estimate. This difference is largely due to $3.9 billion in lower than estimated outlays for Department of State and U.S. Agency for International Development economic, security, and development assistance accounts, in part due to the time required to meet congressional pre-obligation requirements. In addition, Foreign Military Sales outlays were $1.8 billion lower than expected due to higher-than-anticipated receipts received from foreign governments for weapons purchases.

Social Security Administration — Outlays for the Social Security Administration were $1,416.3 billion, $2.5 billion higher than the MSR estimate. The difference is primarily attributable to higher-than-expected actual outlays for the Old-Age, Survivors, and Disability Insurance program, partially offset by slightly lower outlays for the Supplemental Security Income program. Actual benefit payments were slightly higher than the estimates in the MSR, mainly due to a higher number of beneficiaries and recipients, with smaller net increases due to higher levels of retroactive underpayments.

Federal Communications Commission — Outlays for the Federal Communications Commission were $17.9 billion, $2.3 billion lower than the MSR estimate. This is mainly due to lower than anticipated outlays for the Affordable Connectivity Program (ACP) and the Emergency Connectivity Fund for Educational Connections and Devices (ECF). Also, Universal Service Fund outlays were $498 million higher than anticipated.

Federal Deposit Insurance Corporation — Net outlays for the FDIC were $91.7 billion, $73.3 billion higher than the MSR estimate. Outlays are substantially higher than projected primarily due to a $49.4 billion disbursement in connection with a September 15, 2023 intragovernmental transaction with the Federal Financing Bank (FFB). The FDIC, acting in its capacity as receiver for First Republic Bank, issued a note to the FFB in exchange for cash flows from a purchase money note issued to the FDIC receivership by JP Morgan Chase Bank, N.A. In addition, recoveries associated with failed banks were slower than projected.

Postal Service — Outlays for the United States Postal Service were $5.5 billion, $2.1 billion higher than the MSR estimate, due primarily to workers’ compensation-related costs.

Allowances — The MSR included a $6.9 billion allowance to adjust estimates for the historical tendency to overstate current year outlays at the budget level.

Table 2- Receipts by Source

Table 3- Outlays by Agency 

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Official news published at https://home.treasury.gov/news/press-releases/jy1829