Federal Surplus Reached Record in April as Taxes, Other Revenue Nearly Doubled
WASHINGTON—Federal revenue almost doubled in April compared with a year earlier, reaching a record and driving a monthly government surplus of $308 billion, which Treasury officials said also set a record for the largest monthly surplus.
Government revenue from taxes and other receipts for the month rose by 97% from a year earlier to $864 billion, not adjusting for calendar differences, the Treasury Department reported Wednesday. Federal outlays in April fell by 16% to $555 billion, the Treasury said, reflecting a decline in pandemic-related spending.
Still, the federal government spent 32% more on servicing its debt in April compared with a year earlier as persistently high inflation pushed borrowing costs higher.
Higher tax receipts reflect strong job growth and a broader economic recovery since a brief recession in 2020 that has fueled wage increases in recent years. Meanwhile, government spending declined as much of the trillions in pandemic aid receded from the economy.
April’s $308 billion surplus was the largest recorded in a single month on record, Treasury officials said. Surplus and deficit amounts aren’t inflation adjusted. It is only the second monthly surplus recorded since 2019.
Historically, it is common for the government to record a surplus in April, the month when many Americans pay their tax bills, but the government delayed the deadline for tax payments in 2020 and 2021 to later in the year. The second-highest level of monthly government revenue came in July 2020, when tax filings were due and government receipts came in at $564 billion, according to Treasury officials.
The combination of lower spending and higher revenue has led to a precipitous drop in the deficit from its pandemic-fueled highs, a trend that the White House has repeatedly touted. Over the course of the first seven months of this fiscal year, the deficit has dropped by roughly $1.5 trillion as compared with the same period last year.
The nearly $3 trillion in revenue the government has brought in so far this fiscal year is also a record, according to Treasury officials.
In a speech Tuesday, President
Biden
said that the decline in the deficit could help ease inflation, which ran at an 8.3% annual rate in April as measured by the consumer-price index.
“The deficit has gone down both years I’ve been here. That is not an abstraction. It matters. It matters to families, because reducing the deficit is one of the main ways we can ease inflationary pressures,” he said.
Republicans, including Senate Minority Leader
Mitch McConnell
(R., Ky.), have blamed Mr. Biden and Democrats’ policies for helping fuel inflation. That includes passing a roughly $2 trillion pandemic-aid package early last year in a party-line vote.
While economists say that the impact of reducing the deficit on inflation depends on how policy makers reduce the deficit, the impact of inflation on government borrowing has been more straightforward: It is becoming more expensive. As the Federal Reserve raises rates and reduces its holdings of Treasurys in a bid to bring down inflation, the yield on the benchmark 10-year Treasury has hovered around 3%, up from roughly 1.5% in December.
The 32% increase on borrowing costs to $60 billion this April is largely due to the higher cost for inflation-protected Treasurys, according to Treasury officials, with only a small portion of higher borrowing costs this fiscal year due to rising interest rates.
More expensive borrowing costs could challenge a newfound consensus in Washington about deficit-financed government spending. In recent years, policy makers in both parties have largely shrugged off concerns about the deficit as low interest rates kept borrowing costs down, with lawmakers running up the deficit on tax cuts and emergency spending measures.
With the return of high inflation, some lawmakers have started to again oppose large-scale government spending. Sen.
Joe Manchin
(D., W.Va.) has killed many of Democrats’ economic ambitions because of his concerns about exacerbating inflation and widening the deficit.
—Anthony DeBarros contributed to this article.
Write to Andrew Duehren at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—Federal revenue almost doubled in April compared with a year earlier, reaching a record and driving a monthly government surplus of $308 billion, which Treasury officials said also set a record for the largest monthly surplus.
Government revenue from taxes and other receipts for the month rose by 97% from a year earlier to $864 billion, not adjusting for calendar differences, the Treasury Department reported Wednesday. Federal outlays in April fell by 16% to $555 billion, the Treasury said, reflecting a decline in pandemic-related spending.
Still, the federal government spent 32% more on servicing its debt in April compared with a year earlier as persistently high inflation pushed borrowing costs higher.
Higher tax receipts reflect strong job growth and a broader economic recovery since a brief recession in 2020 that has fueled wage increases in recent years. Meanwhile, government spending declined as much of the trillions in pandemic aid receded from the economy.
April’s $308 billion surplus was the largest recorded in a single month on record, Treasury officials said. Surplus and deficit amounts aren’t inflation adjusted. It is only the second monthly surplus recorded since 2019.
Historically, it is common for the government to record a surplus in April, the month when many Americans pay their tax bills, but the government delayed the deadline for tax payments in 2020 and 2021 to later in the year. The second-highest level of monthly government revenue came in July 2020, when tax filings were due and government receipts came in at $564 billion, according to Treasury officials.
The combination of lower spending and higher revenue has led to a precipitous drop in the deficit from its pandemic-fueled highs, a trend that the White House has repeatedly touted. Over the course of the first seven months of this fiscal year, the deficit has dropped by roughly $1.5 trillion as compared with the same period last year.
The nearly $3 trillion in revenue the government has brought in so far this fiscal year is also a record, according to Treasury officials.
In a speech Tuesday, President
Biden
said that the decline in the deficit could help ease inflation, which ran at an 8.3% annual rate in April as measured by the consumer-price index.
“The deficit has gone down both years I’ve been here. That is not an abstraction. It matters. It matters to families, because reducing the deficit is one of the main ways we can ease inflationary pressures,” he said.
Republicans, including Senate Minority Leader
Mitch McConnell
(R., Ky.), have blamed Mr. Biden and Democrats’ policies for helping fuel inflation. That includes passing a roughly $2 trillion pandemic-aid package early last year in a party-line vote.
While economists say that the impact of reducing the deficit on inflation depends on how policy makers reduce the deficit, the impact of inflation on government borrowing has been more straightforward: It is becoming more expensive. As the Federal Reserve raises rates and reduces its holdings of Treasurys in a bid to bring down inflation, the yield on the benchmark 10-year Treasury has hovered around 3%, up from roughly 1.5% in December.
The 32% increase on borrowing costs to $60 billion this April is largely due to the higher cost for inflation-protected Treasurys, according to Treasury officials, with only a small portion of higher borrowing costs this fiscal year due to rising interest rates.
More expensive borrowing costs could challenge a newfound consensus in Washington about deficit-financed government spending. In recent years, policy makers in both parties have largely shrugged off concerns about the deficit as low interest rates kept borrowing costs down, with lawmakers running up the deficit on tax cuts and emergency spending measures.
With the return of high inflation, some lawmakers have started to again oppose large-scale government spending. Sen.
Joe Manchin
(D., W.Va.) has killed many of Democrats’ economic ambitions because of his concerns about exacerbating inflation and widening the deficit.
—Anthony DeBarros contributed to this article.
Write to Andrew Duehren at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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