Daily Management Review

$39 Billion Budget Deficit For January Posted By US Due To Bailing Out Of Pension Fund


$39 Billion Budget Deficit For January Posted By US Due To Bailing Out Of Pension Fund
The US government published a $39 billion budget deficit in January, down from a $119 billion monthly surplus the previous year, as revenues fell and one-time costs, such as the bailout of a union pension fund, pushed outlays sharply higher, according to the Treasury Department on Friday.
The report, which comes as the Treasury employs extraordinary cash management measures to avoid exceeding the federal debt limit, shows receipts at $447 billion last month, a $18 billion, or 4%, decrease from January 2022.
Aside from one-time costs, the budget data showed no significant deviations from recent trends of slightly slower revenues and rising costs for Medicare, Social Security, and interest on the national debt.
The Treasury has stated that unless Congress raises the $31.4 trillion statutory debt ceiling, it may not be able to pay US obligations beyond early June. Republicans want spending concessions from President Joe Biden, who has stated that raising the debt ceiling will not be negotiated.
In January, the United States spent $486 billion, up $140 billion, or 4%, from the previous year, thanks in part to Biden's $36 billion bailout of the Central States Pension Fund, which protects the pensions of over 350,000 Teamsters union workers and retirees.
The comparisons of January outlays were also influenced by the non-recurrence of a communications spectrum auction last year, which reduced outlays in January 2022 by approximately $70 billion.
Social Security costs increased by $12 billion, or 12%, in January compared to the previous year, reaching $114 billion due to cost-of-living adjustments. Interest on the national debt increased by $8 billion, or 18%, to $51 billion in January.
Individual income and payroll taxes withheld increased by $11 billion, or 4%, in January to $279 billion. A drag from lower bonus payments in December and January is expected to fade in the coming months as employment remains high, according to a Treasury official.
Non-withheld receipts fell $9 billion, or 6%, to $141 billion in January, reflecting lower capital gains realized.
In January, the Federal Reserve earned no money because higher interest payments on bank reserves offset any bond portfolio income.
This compares to Fed earnings of $10 billion in January 2022, and the Treasury official predicted that the zero-earnings trend would continue for several years.
US receipts fell $44 billion, or 3%, to $1.473 trillion in the first four months of the fiscal year, which began in October, while outlays increased $157 billion, or 9%, to $1.933 trillion, a record for the period.