The US government posted a $39 billion budget deficit for January after a $119 billion monthly surplus a year earlier, as revenues dipped and one-time costs, including the bailout of a union pension fund, pushed outlays sharply higher, the Treasury Department said on Friday.
The report, which comes as Treasury employs extraordinary cash management measures to avoid breaching the federal debt limit, showed receipts at $447 billion last month, down $18 billion, or 4%, from January 2022.
Outside of the one-time costs, the budget data did not show major shifts from recent trends of slightly slowing revenues and rising costs for Medicare, Social Security and interest on the public debt.
The Treasury has said its ability to pay US obligations may not last past early June unless Congress raises the $31.4 trillion statutory debt ceiling. Republicans want spending concessions from President Joe Biden, who has said he will not negotiate over raising the limit.
US federal outlays in January were $486 billion, up $140 billion, or 4%, from a year earlier due in part to Biden’s $36 billion bailout of the Central States Pension Fund to prevent cuts to the pensions of over 350,000 Teamsters union workers and retirees that it serves.
The January outlays comparisons were also affected by the non-recurrence of a communications spectrum auction last year that had the effect of reducing outlays in January 2022 by some $70 billion.
Social Security costs in January rose $12 billion or 12% compared to a year earlier, reaching $114 billion due to cost-of-living adjustments. Interest on the public debt rose $8 billion, or 18%, reaching $51 billion in January.
Withheld individual income and payroll taxes in January rose $11 billion, or 4% from a year ago, reaching $279 billion. A drag effect from lower bonus payments in December and January is expected to fade in coming months amid continued high employment, a Treasury official said.
January non-withheld receipts fell $9 billion, or 6%, to $141 billion, reflecting lower capital gains being realized.
The Federal Reserve posted no earnings in January as higher interest paid on bank reserves offset any bond portfolio income. This compared to Fed earnings of $10 billion in January 2022 and the zero-earnings trend was expected to continue potentially for several years, the Treasury official said.
For the first four months of the fiscal year, which started in October, US receipts fell $44 billion, or 3%, to $1.473 trillion, while outlays grew $157 billion, or 9%, to $1.933 trillion, a record for the period.