The monthly federal deficit hit a record $249billion in November – $57 billion wider than the same month last year – with federal spending also hitting new heights in consecutive months, while tax revenues dropped.
It comes after the deficit had decreased, according to Biden, by $1.4 trillion – though the non-partisan Bipartisan Policy Center said the reason for the decreased deficit was increased revenues through taxes and reduced federal spending, which came after Covid-related spending expired.
The deficit is $57billion higher than it was in November of 2021 – which is a record-breaking year-on-year change. Federal spending is up $28billion from last year to $501billion in November 2022, according to the Treasury Department.
While increased tax revenues were responsible for shrinking the deficit, revenues are down $13billion year-to-year to $252billion.
The federal deficit hit a record $249billion in November, with federal spending hitting record highs in consecutive months while tax revenues dropped
It comes after the deficit had decreased, according to President Joe Biden, by $1.4 trillion, though the non-partisan Bipartisan Policy Center said the reason for the decreased deficit was increased revenues through taxes and reduced federal spending, which came after Covid-related spending expired
The deficit is still $57billion higher than it was in November of 2021, with federal spending up $28billion from last year to $501billion in November 2022, according to the Treasury Department. While increased tax revenues were responsible for shrinking the deficit, revenues are down $13billion year-to-year to $252billion
The decline in revenues was due to a small drop in individual tax withholdings, a 64 increase on tax refunds and a 98 percent decline in Federal Reserve earnings.
Spending was, in part, driven by an 18 percent – or $14billion – increase in Medicare spending and a 94 percent increase in education costs thanks to Biden’s student loan forgiveness programs.
The Treasury’s interest costs on public debt grew 53 percent or $19billion during November, but this was largely offset by a $17billion decline in tax credits for children and low-income workers.
For the first two months of fiscal 2023, the Treasury’s interest payments are up $48billion, or 87 percent.
The Treasury’s deficit for the first two months of fiscal year 2023 was down 6 percent, or $20billion, to $336billion, with outlays down 2 percent and revenues up 1 percent compared to the year earlier period.
The deficit is unlikely to shrink again, according to the Wall Street Journal, as government spending is expected to either stay the same or increase via aid programs.
The federal budget deficit totaled $1.38 trillion this year – that’s down from $2.78 trillion in fiscal 2021
Government spending will likely be a huge talking point as Republicans take over the House of Representatives in 2023.
There may be fights on federal spending, Social Security, Medicare and the debt limit among the new Congress.
House Republican leader Kevin McCarthy said in October that he would stop raising the country’s debt limit, telling Punchbowl News that ‘we’re not just going to keep lifting your credit card limit.’
However, the interview was given when it seemed more likely he would be elected Speaker of the House, which currently is in question.
Spending may be stopped by financial hawks in the GOP unless the Democrats are willing to go along with budget cuts.
While Biden took credit for the decrease in the deficit in October, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, slammed Biden’s victory lap at the time as irresponsible.
‘The entirety of the decline in the deficit between 2021 and 2022 can be attributed to the expiration of temporary COVID relief, not due to a renewed era of fiscal responsibility,’ she said in a statement.
‘In fact, the deficit would have been almost $400 billion lower had the Biden Administration not decided to enact an inflationary, costly, and regressive student debt cancellation plan in August,’ she noted.
The Department of Education saw $378 billion spending increase after Biden’s decision in August to cancel some student debt, leading to an increased debt.
Biden, however, argued in his remarks that Democrats are not ‘big spenders.’
‘Now, listen to me closely: Congressional Republicans love to call Democrats ‘big spenders,’ and they always claim to be for less federal spending,’ he said.
But Republicans, he warned, will hurt the economy by cutting Social Security and Medicare while decreasing taxes on the rich.
‘If you’re worried about the economy, you need to know this: The Republican leadership in Congress has made it clear they will crash the economy next year by threatening the full faith and credit of the United States for the first time in our history, putting the United States in default,’ Biden said.
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