Fiscal 2020 Deficit Through June

The chart below compares the U.S. fiscal 2020 deficit by month with Fiscal 2019. The federal government’s response to the COVID-19 pandemic has had a profound impact on the federal deficit.

The deficit cumulative deficit through June was in excess of $2.7 trillion, This is $2 trillion more than the cumulative deficit through June 2019. The deficit for the month of June was estimated to be $683 billion. That means the U.S. government was overspending by nearly $23 billion per day.

The spending may be fully justified in response to the global health crisis and prevent the U.S. from falling into another Great Depression. However, it remains to be seen how long the U.S. can continue to overspend by $23 billion per day without other short-term or long-term repercussions.

National Debt Exceeds $23 Trillion

Last week, the U.S. national debt crested $23 trillion. With all of the political drama surrounding the impeachment of President Trump, this milestone received scant media coverage. The lack of attention to the issue by the media doesn’t lessen the gravity of the national debt. The deficit for next year is expected to exceed $1 trillion, so the national debt will bypass $24 trillion by the end of next year.

Sadly, Congress, the President and most politicians seem to have little interest in eliminating the annual overspending and reducing the debt. It seems like the exact opposite is happening for the 2020 campaign season. Candidates are proposing more government spending, with few details of how to pay for their new plans. The result will be more deficit spending.

Are you satisfied with the way Congress, the President and our political leaders are addressing our $23 trillion debt?

Fiscal 2019 Deficit by Month

Below is a chart comparing the monthly deficit or surplus of the United States with the prior fiscal year (October 1 through September 30). During Fiscal 2019, the federal government overspent by $984 billion, which is $205 billion more than the $779 deficit for Fiscal 2018.

As a percentage, the U.S. deficit rose by a whopping 26.3%. Fiscal 2019 receipts increased by 4%, but spending increased by twice as much. You don’t have to be a financial wizard to recognize there is a problem when spending is increasing at twice the rate of revenues. This trend is not sustainable.

Does it alarm you the federal government overspent by nearly $1 trillion last year, and that spending is growing twice as fast as revenues?

Fiscal 2019 Deficit Through August

Below is a chart tracking the monthly deficit of the U.S. government for the current fiscal year, in comparison to last year (Fiscal 2018). The deficit through the first eleven months was in excess of $1 trillion. Since September is a month when tax payments are due, the September surplus should push the deficit for the year below $1 trillion… but not by much.

Since September 1 occurred on the weekend, certain payments that would normally be paid in September were paid in August. This shift in timing increased the August deficit by $24 billion. A similar timing shift happened in 2018. Even with this timing differential, the year-to-date deficit is $168 billion more than last year.

What do you think about federal spending that has exceeded revenues by more than $1 trillion over the past 11 months?

Fiscal 2019 Deficit Through July

Below is a chart comparing the current year U.S. budget deficit with the prior fiscal year. Through the end of July, the federal government has overspent by $867 billion.

The current year-to-date deficit is $182 billion more than the deficit through July 2018. It’s also more than the deficit for all of Fiscal 2018 (the fiscal year ends on September 30). Based on the current spending, the annual deficit for Fiscal 2019 will exceed $1 trillion.

The last time the deficit exceeded $1 trillion, the U.S. was spending to stave off another Great Depression. At present, the economy is not in recession. Instead, the stock market is reaching all-time record levels, unemployment is at records lows and the economy is booming. Despite these prosperous times, Congress and the President continue to overspend with little regard for the future, or how the U.S. national debt is going to be repaid.

Are you concerned with a $1 trillion annual deficit in the midst of economic prosperity?

Fiscal 2019 Deficit Through June

Below is a chart comparing the monthly deficit or surplus for Fiscal 2019 in comparison with Fiscal 2018. Through the first nine months of this fiscal year, the U.S. government overspent by $746 billion, which is $139 billion more than last fiscal year.

The deficit for July was only $9 billion. This primarily due to $50 billion of July expenditures which were paid in June, since July 1 fell on a Saturday.

Government receipts were up by 3 percent for the first nine months of Fiscal 2019. However, expenditures were up by 7 percent. With this 4 percent spread, it’s easy to see why the deficit has grown by another $139 billion this year.

How sustainable do you think it is for expenditures increase by more than double the rate of revenues?

Fiscal 2019 Deficit Through May

The chart below compares the U.S. government’s monthly deficit or surplus for Fiscal Year 2019 with Fiscal Year 2018. Through the end of May, which is seven months into the fiscal year, the U.S. government has overspent by $738 billion.

To make a fair comparison, the May deficit is $50 billion higher, because of June payments made in May. Since June 1 was on Saturday, certain expenditures were paid in May instead of June. If you subtract out this extra $50 billion the deficit was still $688 billion, which is still $155 billion more than the prior seven month period. The CBO still estimates the Fiscal 2019 deficit will be less than $1 trillion, but it wouldn’t take much disruption, either from an economic slowdown or unexpected expenditures, to push beyond the $1 trillion mark.

Excluding the $50 billion timing, the U.S. government is overspending in excess of $22 billion per month. How does that affect you?

Fiscal 2019 Deficit through March

The U.S. government’s deficit for Fiscal 2019 through March 31st was $693 billion. This is $103 billion more than the first half of of Fiscal 2018.

The deficit for Fiscal 2019 is expected to exceed $1 trillion. Consequently, the overspending for the next six months is expected to be approximately 50% less than the first six months. The tax payments received in April are the primary reason the deficit will be much less, as the Federal government will continue to spend at nearly the same rate as the last six months.

How concerned are you with a deficit that is more than $100 billion greater than last year; a 17.5% increase?

Fiscal 2019 Deficit through February

Below is a graph tracking the monthly surplus or deficit in comparison to the prior fiscal year.

Through the end of February 2019, the U.S. government has overspent by $537 billion. The Fiscal 2018 deficit through February was $391 billion. Therefore, the federal government has spent an additional $146 billion through the first five months of this fiscal year.

Revenues collected by the U.S. Treasury were essentially the same as the prior fiscal year. However, spending increased by nearly 6%. If revenues are not growing but expenses are, it’s easy to see why the annual deficit continues to rise.

How sustainable do you think it is for government spending to increase 6% more than revenues each year?

Fiscal 2019 Deficit Through November

The chart below compares the U.S. deficit by month with the prior fiscal year. In the first two months of the year, the U.S. has overspent by $303 billion, which is $101 billion more than last year.

Since December 1, 2018 fell on a Saturday, certain payments that would have been made in December were accelerated into November. Subtracting the timing of those payments, the deficit would have been $229 billion. Considering there were 61 days in October and November, the U.S. government spent $3.75 billion more each day than it received. With a projected deficit of nearly $1 trillion this year, the overspending will decrease to an average of $2.75 billion per day.

How long do you think the U.S can continue overspending nearly $3 billion each day?

Fiscal 2019 Deficit Through October

The U.S. government started a new fiscal year on October 1, 2018, which will end on September 30, 2019. The federal government overspent by $98 billion in October. The chart below compares the monthly deficit or surplus for the current fiscal year with Fiscal 2018.

Congress has yet to agree on a budget for Fiscal 2019, nor have they passed all of the required spending bills. To keep the government operating until after the November election, Congress passed a Continuing Resolution (CR), which temporarily funded the government until December. The CR effectively puts the government on autopilot until Congress can pass the necessary fiscal legislation.

The preliminary estimate is the U.S. government will overspend by nearly $1 trillion this year. The deficit may be higher or lower, depending upon the final agreement reached by Congress and the President. Since fiscal issues were not a major campaign issue during the 2018 election cycle, don’t expect Congress to make any significant changes that will reduce the deficit.

How concerned are you that the U.S. government will overspend by nearly $1 trillion this year?

Impact of the 2018 Midterm Election

The 2018 midterm election is nearly over. Most of the national attention is focused on the control of Congress. Can the Democrats wrest control of the House and/or Senate from Republicans, or will the GOP retain control of either Chamber?

From a fiscal policy standpoint, it may not matter what happens. That is a rather dour assessment, but it’s true. If you look at the annual budget deficits since 2000, it doesn’t seem to matter much which party controls Congress or the White House. There have been all variations of party control over the past 18 years, and the result is the same… annual deficits ranging from $140 billion to $1.4 trillion. Although both parties may talk about balancing the budget and reducing the debt, neither have taken any serious action over the past two decades to do anything about it. Instead, they have more than doubled the national debt in less than a decade.

Since balancing the budget and reducing the $21 trillion national debt are largely absent from the political discourse in the midterm elections, don’t expect whoever is elected to suddenly pay attention to them. Balancing the budget and reducing the debt is going to require difficult decisions, which may be politically unpopular. As a result, few politicians will tackle these issues. It’s far easier to promise constituents something more (either more spending or less taxes), than take a controversial stance that may anger certain voters.

It’s a rather pessimistic view, but probably realistic to think little will be done over the next two years to change our nation’s fiscal policies no matter who wins on Tuesday. The 2018 midterm election may be impact a lot of other issues, but it isn’t likely to change the financial position of the U.S. government.

Fiscal 2018 Deficit through August

The chart below compares the monthly deficit for Fiscal 2018 with Fiscal 2017. The cumulative deficit for the first 11 months of the year is $895 billion.

The federal government recorded a whopping $210 billion deficit for August. Since September 1 occurred on Saturday, the government paid approximately $55 billion of expenditures in August which normally would have been paid in September. Excluding this timing difference, the U.S. still would have overspent by $155 billion.

The acceleration of the $55 billion payments into August and the September tax collections will likely result in a monthly surplus for September. However, the U.S. government will overspend in excess of $800 billion this year.

Are you concerned the federal government will record a deficit in excess of $800 billion this year?

Fiscal 2018 Deficit Through July

The chart below compares the monthly deficit or surplus for the current fiscal year with Fiscal 2017. The U.S. government posted a $74 billion deficit in July, which is $31 billion more than July 2017.

The cumulative deficit through July 2018 is $682 billion; $118 billion more than the $564 billion deficit through July 2017. Based on current projections, the federal government will overspend another $111 billion over the next two months pushing the Fiscal 2018 deficit to $793 billion. 

Congress is currently working on the Fiscal 2019 budget and spending bills. Absent any significant changes, which is unlikely with the mid-term 2018 elections a few weeks away, the federal government will spend $1 trillion more than it collects during Fiscal 2019. 

Even though the U.S. is on the verge of indefinite trillion budget deficits, why do you think fiscal matters are barely mentioned during this election cycle?

Fiscal 2018 Deficit Through June

The chart below compares the U.S. government monthly deficit for Fiscal 2018 with 2017. Nine months into the current fiscal year, which ends September 30, 2018, the government has overspent by $607 billion. The government expects to overspend by another $186 billion over the next three months.

At this rate, the government is overspending by an average of $66 billion every month. A couple of decades ago, the U.S. government overspent by less than $66 billion each year, and back then, key Congressional leaders were pushing hard to reign in federal spending. Today, Congress will spend another $50-100 billion without even blinking an eye.

Why do you think our attitude towards spending billions more than the government collects each year has changed over the past few decades?

Fiscal 2018 Deficit Through April

The graph below illustrates the monthly deficit or surplus for Fiscal 2018. 

The cumulative deficit through the end of April is $382 billion, which is $39 billion more than last fiscal year. The large surplus in April is primarily due to the payment of individual taxes that were due April 15th. Based on current projections, the federal government won't have another surplus month this fiscal year and the deficit will more than double over the next five months.

What are your thoughts about the Fiscal 2018 deficit?

The Cost of Higher Interest Rates

The amount of interest paid by the U.S. government is one of the fastest growing expenditures of the federal government. With a national debt in excess of $21 trillion, small increases in the interest rate results in the government paying billions of dollars in additional interest.

Interest rates have been at historic lows for nearly a decade, but rates are starting to rise. This is good news for investors, but bad news for the federal government. With a $21 trillion debt, a 1% rise in the interest rate will cost the U.S. government $210 billion of additional interest. As illustrated in the chart below, that is more than the federal government spent on eight Departments last year.

This additional interest cost will add to the annual overspending and make it more difficult to balance the budget. It will also exacerbate the budget battles in Congress.

Broken Process = Bad Results

If you’re concerned about the continued rise in the federal debt, you’re probably not very pleased with the spending bill that recently passed Congress. The $1.3 trillion spending plan, only covers about 25% of total federal spending. The U.S. government spends another $3 trillion for what is classified as mandatory spending (e.g. Social Security, Medicare, Medicaid, interest on the debt). 

Although there are a lot of aspects to increased spending, the process is a contributing factor. As one Representative opined, “Nothing good comes from legislation passed at the deadline.” Members of Congress know that last-minute, must-pass legislation is an opportunity for a lot of pork-barrel spending.

Congress has a budget and spending process but hasn’t followed it for years. The process begins with a proposed budget by the President in February. Congress then passes it’s own Budget Resolution by May, followed by 12 different Appropriations (spending) bills, that can be enacted before the beginning of the fiscal year on October 1.

For the current fiscal year, Congress didn’t pass its Budget Resolution until November and just passed the spending bill in March; nearly 6 months after the fiscal started. Instead of passing 12 different spending bills, everything was rolled into one massive 2,200+ page bill, that was passed within 24 hours of being written. 

Following the process doesn’t guarantee a balanced budget or reduced spending. However, Congress’ failure  to follow its budget process is helping to drive increased federal spending.

Do you agree the broken process is leading to bad fiscal results?

Fiscal 2018 Deficit through March

The chart below compares the monthly deficit of Fiscal 2018 with Fiscal 2017. Through the first six months of the fiscal year, the federal government has overspent by $598 billion, which is $73 billion more than the prior year. As a percentage, the deficit is nearly 14% greater than one year ago.

The rate of growth in federal revenues has slowed since the beginning of January. Since most of the tax law changes became effective on January 1, this is not a complete shock, especially since the CBO projected the federal government would collect $1 trillion less over the next decade. Add in the additional spending approved through the Fiscal 2018 Omnibus appropriations bill, and the deficit will continue to increase throughout the rest of the fiscal year.

What do you think of the current increase of the federal deficit?

Fiscal 2018 Deficit Through February

Below is a graph tracking the deficit of the U.S. government by month, in comparison to the prior fiscal year. Through February 28, 2018 (five months into the current fiscal year), the federal government has overspent by $392 billion.

See the big blue line for February? That shows the federal government overspent by approximately $216 billion; just in February. Considering there are only 28 days in February, our government overspent by nearly $8 billion each day.

Any rational person would have to admit this is unsustainable, yet Congress seems to have little time, attention or political willpower to anything about it.

What do you think about the current spending pattern of the U.S. government?