U.S. Treasury Got $113 Billion Surplus in April

Posted on May 13, 2022

U.S. Treasury Got $113 Billion Surplus in April

The U.S. Treasury had a rare surplus of $113 billion in April, the best in five years. The country’s slow, but steady economic growth, coupled with higher taxes, has contributed in the surplus.

Lex18 discusses the statistics on the deficit, “Through the first seven months of the budget year, the deficit was $488 billion. That’s lower than last year’s deficit of $720 billion over the same period.

Even with the April surplus, the deficit for the full year will still be quite large with the CBO expecting it to reach $845 billion. That would be down from $1.1 trillion in 2012, and will be the first annual deficit below $1 trillion since 2008.

The federal deficit represents simply the annual difference between the government’s spending and the tax revenues it takes in. Each deficit contributes to the national debt, which recently topped $16 trillion.”

There is a growing pressure on the Obama administration and lawmakers to raise the borrowing limit. If the Treasury keeps receiving additional revenue, the need to push the borrowing limit further could be postponed.

The increase in revenue for April is explained by Lex18, “One reason is revenue has risen 16 percent so far this budget year to $1.6 trillion. That’s the biggest tax haul for the October-April period on record, a senior Treasury official said. The government will also benefit next month from a $59.4 billion payment from mortgage giant Fannie Mae and a $7 billion payment from Freddie Mac. The mortgage giants are profitable again and are paying dividends to the government in return for the loans the received during the financial crisis.

Treasury Secretary Jacob Lew said in an interview with CNBC Friday that in part because of Fannie’s payment, the government’s borrowing limit won’t be reached until “at least after Labor Day” in early September. Many analysts had expected another budget battle this summer. In 2011, a dispute between the Obama Administration and Congress over whether to raise the limit lasted until the deadline.

There is usually a surplus in April because that is when the government receives an influx of annual tax payments. But tax receipts this April are 28 percent higher than in April 2012.

The increases partly reflect higher tax rates. Social Security taxes rose 2 percentage points Jan. 1 after a two-year cut expired. Income tax rates for the highest-earning 1 percent of the population also rose.

Accelerated dividend and bonus payments also boosted tax receipts earlier in the budget year. Many companies made special payments at the end of last year in anticipation that taxes would increase in 2013. As a result, income tax payments that weren’t withheld jumped 40 percent in April compared with the same month a year ago.”