America’s budget deficit has doubled in the last 12 months to $2 trillion U.S.
New data shows that the U.S. government ran a $2.02 trillion U.S. deficit for the fiscal year ended September 30, which is roughly double the $1.02 trillion U.S. deficit of the previous year.
The latest deficit figure has touched off a firestorm of controversy in Washington, D.C. and is likely to worsen the partisan budget battles between Democrat and Republican lawmakers.
At the same time, U.S. Treasuries are reaching highs not seen since before the 2008 financial crisis, with the government needing to issue more debt to cover the shortfall of revenues relative to spending. The yield on the 10-year U.S. Treasury surpassed 5% on Oct. 23.
Republican lawmakers continue to struggle to appoint a new speaker of the House of Representatives while spending needs continue to rise in the U.S.
President Joe Biden recently called for $106 billion U.S. in emergency funding for Israel, Ukraine, and to contain immigration along the U.S.-Mexico border.
Measured as a share of gross domestic product (GDP), the widening U.S. deficit is growing at its fastest clip since 1950, according to JPMorgan Chase (JPM).
The doubling of the budget deficit over the past 12 months is being blamed on a decline in the amount of revenue the U.S. government collected.
There was a $456 billion U.S. plunge in individual income-tax receipts, the single largest decline in taxes collected over the last two years.
Tax receipts fell over the last year due to a drop in the stock market in 2022, which hurt the collection of capital gains taxes, as well as extensions granted to households and businesses in areas affected by natural disasters, which includes most of California that was hit by wildfires.
Analysts say they expect the U.S. budget deficit for the current fiscal year that began on Oct. 1 to shrink due to the positive performance of financial markets in 2023 and an increase in tax collections.