Northwest Arkansas Democrat-Gazette
Deficit up by $262B in February
5-month total increases 41% over gain logged last year
The U. S. budget deficit grew to $262 billion in February while the deficit for the first five months of the fiscal year hit $723 billion.
The five-month deficit total ending in February indicates much higher spending compared with the government’s year-to-date deficit of $476 billion for the same time frame in fiscal year 2022; this shows the federal deficit grew by 41%, or $247 billion.
There are multiple debt drivers this year, including interest on public debt, higher individual tax refunds, lower federal reserve earnings and higher Social Security costs.
“I think the rise in interest rates has been noticeable and that’s going to continue in the future, I think both as the size of the national debt grows and the interest rates that are paid on newly issued debts rises, that’s going to be a factor we’ll see continue into the near future as long interest rates stay high,” said Jeremy Horpedahl, an associate professor of economic at the University of Central Arkansas.
The government’s interest bill on public debt for February jumped $69 billion, or 29%, from a year ago, Reuters reported Friday.
“As the interest rates go up, because a lot of the debt they issue is such short-term debt, that means that as they are issuing new debt, whether for three, six or 12-month [term] debts, they’re going to be paying a lot higher rates on that than they would have back in February 2022,” Horpedahl said.
Federal government spending increased 4% in February 2023 compared with February 2022 while revenue fell by 10%; outlays were $ 524 billion and receipts were $262 billion in February and Horpedahl said this is normal for the time of year.
Not a lot of taxes are remitted to the government in February, Horpedahl said.
“I think we are seeing that total receipts, if you look over the past 12 months, are about $4.8 trillion, and that’s been pretty level for the past almost year,” Horpedahl said.
“We saw an increase during the pandemic but total federal receipts have been kind of flat if we look at the recent 12-month total.”
Individual withheld tax receipts in February climbed 4%, or $10 billion, compared with a year ago but individual tax refunds, which lowers revenue, grew $31 billion to a total of $52 billion; a 153% increase, according to a Reuters report.
“There’s kind of a shortterm problem with the backlogs from covid but also, over the past number of years, the IRS’ number of revenue agents has been not keeping up with what they need, it’s been falling over the years,” Horpedahl said.
“Congress recently allocated money for the IRS to hire more agents in the last omnibus spending bill, but that’s over a decade- long period. I think the backlogs we’re seeing could continue into next year as the IRS tries to get more staff to help process returns that can’t be done in an automated way and that does mean you might be getting some refunds coming in later than expected.”
The national debt hit $31 trillion for the first time October and had grown to $31.5 trillion by Wednesday.
That figure includes more than $6.8 trillion the government owes itself, including about $2.9 trillion borrowed from the Social Security Trust Fund, according to Treasury Department reports.