As though there were not enough things in the world to worry about at the moment, a perennial issue has once again been percolating: Is the United States’ financial house in order? Talk about the federal government’s deficit — meaning the difference between what it spends and what it collects in taxes — has started to pick back up. The same goes for chatter about the country’s debt. Deficits are a gamble — a wager that the government paying out more than it’s taking in, especially as time goes on, is worth the risk. Not everyone thinks it’s such a good bet.
Some prominent economists who were once pretty laid back on the matter have started to change their tune. Not everyone is setting their hair on fire, but it has been a bit of a “Wait, what?” moment in terms of deciphering just how much to worry, or whether to worry at all.
The federal deficit officially clocked in at $1.7 trillion in fiscal year 2023 (the government’s fiscal year runs from October 1 to September 30), up from almost $1.4 trillion in 2022. Thanks to some wonkiness around the Supreme Court-thwarted attempt to cancel student loan debt, it was actually likely closer to $2 trillion for 2023 and $1 trillion for 2022. In other words, the gap between what the government spends and what it makes is a big one — and about doubled from one year to the next.
There are some 2023-specific reasons that the deficit was particularly high; namely, the government saw a big dip in tax revenue. However, there are plenty of trends that aren’t limited to this specific year.
What’s further spooked onlookers are higher interest rates, which have made the country’s debt more expensive because of higher interest costs. Interest rates on US Treasury bonds started to climb over the summer and into the fall, and while they have come down from some of the highs they were at in October, they remain elevated overall, making people a little more nervous.
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