WASHINGTON—The federal government ran an $85 billion deficit in December, a wider shortfall than in the same month a year earlier, as the government’s debt burden nears its legal limit.
Compared with December 2021, the government brought in $32 billion less in revenue last month, for a total of $455 billion, and spent $32 billion more, for a total of $540 billion. Without adjusting for calendar differences, the overall gap between spending and revenue in December was $64 billion more than the $21 billion deficit in the same month in 2021, according to the Treasury Department.
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The federal deficit dropped last fiscal year as the government wound down huge spending programs responding to the Covid-19 pandemic. But it widened by 12% in the first few months of the fiscal year that began in October as rising interest rates increase borrowing costs for the government. The government posted a record deficit for the month of November in 2022.
The Treasury has spent $57 billion more, a 37% increase, on paying for the government’s debt so far this fiscal year than it did in the same period a year earlier, the largest source of higher government spending. The Federal Reserve has been aggressively raising interest rates to combat inflation.
The federal government is approaching the roughly $31.4 trillion limit on borrowing set by Congress. As of Tuesday, the government has borrowed roughly $31.3 trillion, though it also has roughly $360 billion in cash on hand.
The Treasury Department might soon begin using so-called extraordinary measures to give it flexibility to keep paying the government’s bills on time. Independent forecasters expect the Treasury could exhaust its ability to pay bondholders and Social Security recipients, among others, as early as this summer.
House Speaker
Kevin McCarthy
(R., Calif.) has said he would push for spending cuts in exchange for agreeing to raise the debt limit—a trade Democrats oppose.
“Spending is out of control,” Mr. McCarthy said on Thursday. “We cannot continue around the same process. I had a very good conversation with the president when he called me and I told him I’d like to sit down with him early and work through these challenges.”
If the Biden administration and Democrats and Republicans in Congress don’t reach an agreement to raise the debt limit, it could have far-reaching consequences, likely tipping the economy into a recession and creating a financial panic.
Write to Andrew Duehren at andrew.duehren@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—The federal government ran an $85 billion deficit in December, a wider shortfall than in the same month a year earlier, as the government’s debt burden nears its legal limit.
Compared with December 2021, the government brought in $32 billion less in revenue last month, for a total of $455 billion, and spent $32 billion more, for a total of $540 billion. Without adjusting for calendar differences, the overall gap between spending and revenue in December was $64 billion more than the $21 billion deficit in the same month in 2021, according to the Treasury Department.
SHARE YOUR THOUGHTS
How concerned are you about the federal deficit? Join the conversation below.
The federal deficit dropped last fiscal year as the government wound down huge spending programs responding to the Covid-19 pandemic. But it widened by 12% in the first few months of the fiscal year that began in October as rising interest rates increase borrowing costs for the government. The government posted a record deficit for the month of November in 2022.
The Treasury has spent $57 billion more, a 37% increase, on paying for the government’s debt so far this fiscal year than it did in the same period a year earlier, the largest source of higher government spending. The Federal Reserve has been aggressively raising interest rates to combat inflation.
The federal government is approaching the roughly $31.4 trillion limit on borrowing set by Congress. As of Tuesday, the government has borrowed roughly $31.3 trillion, though it also has roughly $360 billion in cash on hand.
The Treasury Department might soon begin using so-called extraordinary measures to give it flexibility to keep paying the government’s bills on time. Independent forecasters expect the Treasury could exhaust its ability to pay bondholders and Social Security recipients, among others, as early as this summer.
House Speaker
Kevin McCarthy
(R., Calif.) has said he would push for spending cuts in exchange for agreeing to raise the debt limit—a trade Democrats oppose.
“Spending is out of control,” Mr. McCarthy said on Thursday. “We cannot continue around the same process. I had a very good conversation with the president when he called me and I told him I’d like to sit down with him early and work through these challenges.”
If the Biden administration and Democrats and Republicans in Congress don’t reach an agreement to raise the debt limit, it could have far-reaching consequences, likely tipping the economy into a recession and creating a financial panic.
Write to Andrew Duehren at andrew.duehren@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8