Spending increased by 10 percent last year, while tax revenue increased by 11 percent. Interest payments on the debt shot up by 34 percent.
The federal government posted a $1.8 trillion budget deficit during the fiscal year that ended on September 30, despite an increase in tax revenue, thanks to higher spending and the rapid growth of interest costs tied to the $35.6 trillion national debt.
The only good news contained in the Congressional Budget Office's latest revenue report is that the federal budget deficit did not get significantly worse during the most recent fiscal year. The deficit increased by a mere $139 billion when compared to the previous year.
But the fact that the deficit increased at all in a year when revenue from federal tax collections climbed by 11 percent—from $4.4 trillion to $4.9 trillion—suggests something about the nature of the fiscal problems facing the federal government. Specifically: that it's a spending problem. The federal government spent $6.75 trillion last year.
More specifically, it's a borrowing problem. While spending increased by about 10 percent from the year before, the interest payments on the national debt ballooned by 34 percent—from $710 billion to $950 billion. That sharp increase reflects both the size of the national debt, which is now roughly as large as the nation's annual economic output for the first time since World War II, and the rising interest rates that have been a feature of the economy for the past few years.