Deficit Hits $1.4 Trillion So Far in 2023: CBO

Deficit Hits $1.4 Trillion in First 9 Months of Fiscal Year: CBO

The federal budget deficit totaled nearly $1.4 trillion in the first three quarters of the 2023 fiscal year, according to the latest monthly budget review from the Congressional Budget Office released Tuesday.

The deficit was $875 billion larger from October 2022 to June 2023 compared to a year earlier, with revenues 11% lower and outlays 10% higher. Revenues from individual income and payroll taxes fell by 10%, while outlays increased for Social Security (11%), Medicare (17%) and Medicaid (8%).

The CBO expects the full-year deficit to be $1.5 trillion. However, as the monthly report notes, there is considerable uncertainty about the final three months of the fiscal year, given the Supreme Court’s decision to prohibit the Biden administration’s plan to cancel student debt. That plan was recorded as an outlay in 2022; its cancelation is expected to be recorded "as outlay savings of at least $300 billion" in the final months of the fiscal year.

Private Equity Has Been Buying Up Medical Practices and Raising Prices: Report

Private equity firms have been buying up medical practices at a rapidly increasing rate over the past decade, building up market share and increasing prices, according to a study released this week.

"Increased attention to the competition impacts of PE in physician markets is urgently needed," the report says, adding, "The pace at which PE is entering these markets and monetizing medicine makes a quick response imperative."

The report, titled "Monetizing Medicine: Private Equity and Competition in Physician Practice Markets," was the result of a joint project by the American Antitrust Institute, the University of California at Berkeley and the Washington Center for Equitable Growth. It found that private equity acquisitions of physicians’ practices were associated with price increases in eight of the 10 specialty areas studied, with hikes ranging from 4% in primary care and dermatology to 14% for gastroenterology and 16% in oncology.

"Price increases associated with PE acquisitions are exceptionally high where a PE firm controls a competitively significant share of the local market," the report says. In cases where a private equity firm controls more than 30% of the market, gastroenterology prices rose 18%, obstetrics and gynecology increased 16%, and dermatology 13%.

Per-patient spending also went up in six of the 10 specialty areas.

The report’s authors recommend eight immediate policy actions, including increased reporting and scrutiny of private equity acquisitions of small medical practices, greater transparency about ownership, lower barriers to entry for healthcare providers, closing regulatory loopholes and expanding private equity’s legal liability for the actions of their portfolio companies. The authors also recommend restructuring Medicare payments for doctors. "Making practices better able to cover costs will make them less susceptible to acquisition," it says.

What’s next: The private equity industry argues that its investments in medical practices have increased administrative efficiency and freed up doctors to focus on their patients, but The Washington Post’s Peter Whoriskey reports that antitrust regulators have signaled concerns, noting that Deputy Assistant Attorney General Andrew Forman said this in a June 2022 speech: "To the extent that private equity transactions and conduct are focused on short-term gains and aggressive cost-cutting in the health care space, they can lead to disastrous patient outcomes."

Editorial of the Day: Time to Fix the Federal Debt

The Washington Post Editorial Board on Tuesday published the final piece in a lengthy series examining the challenges presented by the growing national debt, which is on pace to climb from 98% of GDP to a record 115% by 2033. The Post warns:

The series, the Post notes, has drawn reader responses "that were usually thoughtful, occasionally praiseful, frequently critical and at times vitriolic." The newspaper’s editors acknowledge that the concerns raised about addressing the debt — "especially about the need to protect the most vulnerable from undue hardship, to honor long-standing commitments to older Americans and veterans, and to avoid growth-stifling austerity" — have for the most part been valid, but they sound optimistic that corrective measures can be achieved equitably and without great disruption. And, they argue, it is time for the government to modernize itself and reexamine choices that have long locked in the policy priorities of previous generations.

"To be sure," they add, "previous forecasts of a debt crisis have, fortunately, not materialized, even as debt has spiraled upward; the bond markets’ appetite for U.S. Treasurys remained robust longer than many had anticipated. Even if the risks to economic stability were nonexistent, however, greater fiscal restraint would still make sense. The country needs to free up room in the budget — fiscal space — for unanticipated new needs, such as another pandemic or a war, and to help protect against possible demographic changes, which could upend existing budget forecasts."

Read the latest editorial here.

Number of the Day: $377 Million

Florida Gov. and Republican presidential candidate Ron DeSantis is foregoing about $377 million in federal funding for his state provided by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, Bloomberg’s Ari Natter reports. The money could have been used to provide rebates to Florida residents who make energy-efficient improvements in their homes, and to train contractors in electrification and upgrade waste-water systems in rural areas.

DeSantis’s move comes as President Joe Biden plays up his infrastructure efforts, which have benefited both red and blue states, in the runup to the 2024 campaign. In response, some Republicans are highlighting their opposition to energy efficiency initiatives, with DeSantis talking about using state funds to subsidize the purchase of gas stoves, which have become a symbol of freedom for some conservatives.

Although Florida still has the option to apply for the funding at a later date, the state is taking no steps to obtain it currently, and DeSantis has zeroed out a grant in the state budget that would fund a program to manage energy efficiency initiatives.

"These programs directly benefit homeowners and renters and these rebates mean that people in Florida would get lower utility bills and healthier and more comfortable homes as well as lower greenhouse gas emissions," Lowell Ungar, director of federal policy for the American Council for an Energy-Efficient Economy, told Bloomberg. "The federal money will help pay for that so it will be a real loss if they don’t implement these programs."

Fiscal News Roundup

Views and Analysis

• We’ve Seen How Hard It Is to Fix the Federal Debt. But It’s Necessary – Washington Post
• It Turns Out That the Debt Matters After All – Annie Lowrey, The Atlantic
• As Hard-Right House Radicals Dig in, Prepare for a Summer of Obstruction – Eugene Robinson, Washington Post
• Biden Is Quietly Reversing Trump’s Sabotage of Obamacare – Catherine Rampell, Washington Post
• The US Economy Is Still on the Path to a Soft Landing – Justin Bloesch and Mike Konczal, Roosevelt Institute
• Inflation Has Cooled off Dramatically Since Last Summer, but 'Back to Normal' Is Still a Long Way Off – Rob Wile, NBC News
• Dude, Where’s My Recession? – Paul Krugman, New York Times
• Gunning for More VA Privatization – Suzanne Gordon and Steve Early, American Prospect
• The Military-Industrial Complex Is Finally Facing Intense Bipartisan Scrutiny – Ryan Grim and Daniel Boguslaw, The Intercept
• The States in America Where Incomes Grow Faster – Wall Street Journal Editorial Board
• In Monetary Policy, It's All About the Lags – Neil Irwin and Courtenay Brown, Axios
• The Fed’s ‘Stress Tests’ Overlook the Dangers Facing Banks – Sheila Bair, Washington Post