The U.S. state budget continues to increase, reaching $470 billion in spending through October 2023, compared to $406 billion in 2022 and $380 billion in October 2019. From January through October 2023, spending totaled $5.16 trillion; in 2022, $5.25 trillion; and in 2019, $3.73 trillion.
However, spending is understated by $330 billion in calendar year 2023 due to unrealized write-offs of student loan advances and overstated in 2022 due to paper advances. As a result, adjusted spending in 2023 would be nearly $5.5 trillion versus $4.92 trillion in actual spending, an 11.5% increase in actual spending.
Major Spending Categories in October 2023
The largest spending items in October 2023, with expenditures over $10 billion, compared to October 2022 and 2019, in billions of dollars, are as follows:
- Net Interest: $76 billion / $43 billion / $32.5 billion
- National Defense: $87.4 billion / $76.5 billion / $71.4 billion
- Social Security + Veterans Benefits (mostly pensions): $131.4 billion / $115.9 billion / $106.6 billion
- Health + Medicare: $94 billion / $89.2 billion / $107.4 billion
- Income Security (any type of targeted government assistance, benefits, grants, and subsidies to the population excluding pensions): $32.9 billion / $42.2 billion / $31 billion
- Education, Employment, and Social Services: $22.3 billion / $18 billion / $11 billion
- Commerce and Housing Credit (state loans, state subsidies, FDIC assistance): $18.3 billion / $4.2 billion / $4.3 billion
- Transportation: $11 billion / $9.7 billion / $8.9 billion.
As you can see, net interest spending is becoming a major concern, with the largest net spending increase of any other spending item, over $33 billion for the year, and total interest spending is nearing the level of Medicare spending.
Government loan spending is growing at a faster rate than defense spending year-over-year. All other spending categories are growing roughly in line with inflation and demographic changes (for pensions and Medicare).
It's essential to keep in mind that the budget hasn't had time to return to full capacity yet due to the temporary budget in place until November 17, owing to the impending shutdown battles.
On the revenue side, revenues totaled $403 billion in October 2023, up from $319 billion a year earlier and $245 billion in 2019. This increase is due in part to deferred September payments for October totaling approximately $40 billion.
Budget Deficit
The budget deficit in October 2023 was $66.6 billion, down from $88 billion a year earlier and $135 billion in 2019. Over 12 months, the deficit amounted to $1.67 trillion, or about $2 trillion when excluding the paper write-off of student advances.
Conclusion
Overall, the budget shows steady growth in spending, reaching $470 billion in October 2023, up from $406 billion in 2022 and $380 billion in October 2019. However, this growth is tempered by adjustments, such as a $330 billion understatement of spending in 2023 due to unrealized write-offs on student loan advances and an overstatement in 2022 due to paper advances, resulting in a revised estimate for 2023 of nearly $5.5 trillion. Notable trends include rising net interest expense as a major concern, government loan spending outpacing defense spending, and most other categories growing in line with inflation and demographics.