The federal budget in January ran a monthly surplus for the first time since September 2019, as the government took in more in tax and other revenue and spent less on Covid-19 pandemic aid programs.
The surplus last month reached $119 billion, the Treasury Department reported Thursday. Government receipts for the month rose by 21% from a year earlier to $465 billion, not adjusting for calendar differences. Federal spending, meanwhile, fell in January by 37% to $346 billion.
In January of the previous fiscal year, the government ran a deficit of roughly $163 billion.
Federal outlays surged during the pandemic as the government administered programs that provided aid to workers, small businesses and families. That spending has receded as many of the programs, such as monthly child tax-credit payments, expired. Government receipts also have been trending higher, with rising wages and salaries boosting workers’ taxable earnings. Receipts from withheld payroll taxes climbed 21% in January from a year earlier, according to Treasury data.
The increase also reflected payments of payroll taxes that employers had been allowed to defer as part of federal coronavirus relief.
The government is running a roughly $259 billion deficit so far in the fiscal year, which began in October, a 65% decline from the $736 billion deficit during the year-ago period.
Treasury’s Thursday report showed a steep decline in outlays at the Labor Department so far in this fiscal year, which a senior Treasury official said was due in part to improvement in U.S. employment levels and the expiration of special pandemic unemployment programs. The official said $142 billion of the decline in overall spending last month was because the Treasury Department didn’t distribute stimulus checks to households as it did in January 2021.
Before the pandemic, the federal government periodically ran monthly surpluses, including in January, April and September in both 2018 and 2019. The government last had an annual surplus in the 2001 fiscal year.
The surplus “does tell us we’re getting back to a more normal budget pattern,” said Paul Van de Water, a senior fellow at the progressive-leaning Center on Budget and Policy Priorities. He noted monthly budget numbers tend to fluctuate and that too much shouldn’t be made of a single reading.
The deficit last fiscal year was equal to 12.4% of U.S. gross domestic product, according to the nonpartisan Congressional Budget Office. The CBO last July forecast the deficit in the current fiscal year would equal 4.7% of GDP.
Gross U.S. national debt earlier this month exceeded $30 trillion for the first time, reflecting increased federal borrowing related to the pandemic.
Higher levels of government spending and borrowing during the pandemic have complicated President
ability to win final congressional approval for a sweeping healthcare, education and climate-change plan, a key component of his economic agenda.
Congressional Republicans and Sen.
(D., W.Va.), whose vote is key in a narrowly divided Senate, have raised concerns about an additional large-scale spending package, given three previous rounds of pandemic aid passed by Congress. Mr. Manchin has said his reservations about additional government spending are also tied to elevated inflation, which last month accelerated to its highest level since February 1982.
Mr. Van de Water said such concerns don’t take into account the Biden administration’s contention that its social-spending plans would be fully paid for.
“Now that the recovery has progressed as far as it has and inflationary pressures are higher than expected, now is no longer the time to be making substantial additions to the debt,” he said. “That’s not what the administration is proposing by any means.”
—Anthony DeBarros contributed to this article.
Write to Amara Omeokwe at [email protected]
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