The 2023 Charts of the Year

The 2023 Charts of the Year

IMAGO/Bihlmayerfotografie via Reuters Connect
By Yuval Rosenberg and Michael Rainey
Wednesday, December 20, 2023

Happy Wednesday! With legislative business wrapped up for the year, our next newsletter won’t come out until January 2. Until then, our thanks to all of you who read The Fiscal Times and our best wishes for a happy and healthy 2024! Here’s our final update for the year.

Senate Wraps Up 2023 Work, Leaving Border-Ukraine Deal for January

The Senate cast its final votes of the year Tuesday night, clearing an extension of Federal Aviation Administration funding until March via unanimous consent and confirming the 11 remaining military nominations that had been held up by Sen. Tommy Tuberville in protest against the Pentagon's abortion-travel policy. (In the end, Tuberville failed to win any concessions through his controversial, months-long blockade.)

Left unfinished as 2023 business wrapped up Wednesday: The supplemental spending package providing aid for Ukraine, Israel and Taiwan, as well as the complicated border policy changes still under negotiation by the Senate and White House.

“Challenging issues remain, but we are committed to addressing needs at the southern border and to helping allies and partners confront serious threats in Israel, Ukraine and the Indo-Pacific. The Senate will not let these national security challenges go unanswered,” Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell said in a joint statement. “As negotiators work through remaining issues, it is our hope that their efforts will allow the Senate to take swift action on the national security supplemental early in the new year.”

What’s next: Congress is out until January 8, and while the Senate leaders continue to express optimism that a deal will get done, it’s not certain at this point that Congress will deliver more aid to Ukraine or pass border security reforms. Schumer expressed concern in an interview with Politico Wednesday that former president Donald Trump could scuttle any compromise agreement by attacking it. “Schumer said he expects roughly five Senate Republicans to vote for a deal no matter what, 15 to vote against it no matter what, and that the rest could all be swayed by Trump as the presidential primary formally kicks off next month,” Politico’s Ursula Perano, Burgess Everett and Anthony Adragna reported.

Number of the Day: 15.3 Million

The number of Americans enrolled in Affordable Care Act plans is on pace to set a record for the third straight year, as more than 15.3 million people have signed up for coverage through the HealthCare.gov marketplace, according to data released Wednesday by the Centers for Medicare & Medicaid Services.

The number represents a 33% increase over this time last year, and the Biden administration projects that a total of more than 19 million people will enroll through the Obamacare marketplace by the January 16 deadline. More than 745,000 people enrolled through HealthCare.gov on December 15, the most for any single day since the portal launched a decade ago.

President Joe Biden celebrated the data, saying in a statement that his policies are lowering insurance premiums for millions of Americans and warning that Republicans want to roll back those gains and repeal the Affordable Care Act.

The Biden campaign sought to use the enrollment figures to attack former president Donald Trump. “Trump tried to kill the ACA before, and he’s promising to try again,” Biden-Harris 2024 Spokesperson Seth Schuster said. “In Donald Trump’s America, millions of people are kicked off their health insurance, denied coverage, and have to choose between getting the care they need and putting food on the table. Those are the stakes next November.”

IRS Waives $1 Billion in Penalties

If you’re one of the millions of taxpayers who still owe the IRS payments for 2020 or 2021, the tax agency has some good news: Late-payment penalties are being waived for those who owe less than $100,000 from those two years.

The IRS said Tuesday the waiver applies to roughly 4.7 million individuals, businesses and tax-exempt organizations that were not sent collection reminder notices during the pandemic. The penalty relief comes to about $206 per tax return on average.

“As the IRS has been preparing to return to normal collection mailings, we have been concerned about taxpayers who haven't heard from us in a while suddenly getting a larger tax bill,” IRS Commissioner Danny Werfel said in a statement. “The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation. We are taking other steps to help taxpayers with past-due bills, and we have options to help people struggling to pay.”

The waiver is temporary, however, and the penalties will come back into effect on April 1, 2024.

Charts of the Year: Inflation and Interest

While it’s too early to declare victory in the war on inflation, there’s no doubt that 2023 saw tremendous progress in the effort to bring price increases under control. As The Wall Street Journal’s Greg Ip points out Wednesday, the Congressional Budget Office estimates that the consumer price index will increase by just 2.5% in the final quarter of the year — roughly the same as expected in the CBO’s economic projections made before the pandemic. Looking forward, the bond market indicates that inflation is expected to remain under 3% in 2024 and beyond, tantalizingly close to the Federal Reserve’s target of 2%.

“[I]t looks like the pandemic caused a spectacular one-time rise in the level of prices but no wage-price spiral or de-anchoring of inflation expectations, both necessary for a sustained higher inflation rate,” Ip writes.

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The Fed’s battle against inflation pushed interest rates sharply higher, though, raising concerns about the rapidly escalating cost of servicing the U.S. national debt. Over the last two years, interest payments on the debt roughly doubled as rates shot higher, with the annualized cost of servicing the debt totaling roughly $1 trillion per year.

Some analysts have argued that the day of reckoning for the national debt that many had feared has finally arrived, as interest payments begin to claim a larger and larger share of the federal budget, with no relief in sight. But as the year comes to an end, interest rates have surprised many observers by falling sharply, driven lower by Wall Street expectations that the Fed will start cutting rates as soon as March 2024 in the face of a slowing economy. The 10-year U.S. Treasury note, which fell below 1% in 2020 as the pandemic took hold, had rocketed to near 5% this past October. Since then, however, it has tumbled below 4%, and will likely end the year close to where it began, near 3.8%.

So what does that mean for the trajectory of debt costs? In a piece about the dynamics of the budget deficit, which is increasing the debt by more than $1 trillion a year at this point, Louise Sheiner of the Brookings Institution told Vox's Emily Stewart that it’s too early to tell if there has been a permanent shift in the market for U.S. debt, one that forces the Treasury to pay more to investors due to the sheer size of the debt that requires financing — and thereby forces Congress to act to slash the deficit and shrink the debt.

“This may be just this little head-fake where interest rates went up and then they came back down and it was no big deal, or we may turn around and may look back at this moment in 10 years and say, ‘That was the moment when people did start to worry about the deficit again,’” Sheiner said, adding, “I don’t know which one it will be.”

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