Large and sustained federal budget deficits are harmful to the fiscal health of the United States. Yet policymakers struggle with reining in the red ink. Even as the U.S. economy expands, the federal government continues to run large and growing budget deficits that will soon exceed $1 trillion per year. It is an ominous trend. BPC’s economic policy team analyzes the government’s running budget deficit on a monthly basis, using data from the Congressional Budget Office’s Monthly Budget Review. This BPC tracker is updated every month.
As usual, April produced a monthly budget surplus, as the government received hundreds of billions of dollars in tax returns during the month. An extraordinary $218 billion surplus in April prompted the cumulative 2018 budget deficit to shrink to $382 billion so far this fiscal year. Last year, the government had accrued a smaller $344 billion deficit through April, and the year before it was even lower. CBO partly attributes this year’s larger deficit to increases in interest spending (up 14 percent vs. last year), Department of Homeland Security spending (mainly disaster relief), as well as increases in spending on Social Security and defense. At the same time, revenues are up overall compared to last year, due mainly to an 8 percent increase from individual income and payroll taxes. Conversely, corporate income taxes declined precipitously compared to last year (by 22 percent), which may reflect behavior influenced by the recent tax legislation.