April is typically the best month for the federal fisc because it’s the tax payment deadline for the previous year. But this year the April budget surplus fell by $135 billion from a year earlier. Including adjustments for timing shifts in federal outlays, the decline was $274 billion, or 73% from April 2022.
That portends bigger budget deficits for the rest of the fiscal year. The deficit for the first seven months is already $928 billion, or 236% higher than in 2022 with timing adjustments. Keep in mind that this is happening when the economy is still growing and the unemployment rate is still low.
The big culprit is spending, which is up 12% in the first seven months or nearly $400 billion, including timing adjustments. Entitlements are up 11% and education spending owing to student-loan changes is up 56%. Chalk this up to the spending pipeline enacted by the last Congress that has years to go unless it’s pared back by this Congress.
And get this: Interest on the national debt rose 40%, or $107 billion, and is already $374 billion for the first seven months. That’s what happens when interest rates rise 500 basis points in a year to fight the inflation that runaway federal spending helped to ignite.