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.

Fiscal 2020 Deficit Through January

The graph below compares the U.S. federal deficit by month to the prior fiscal year. Through the first four months of Fiscal 2020, the U.S. deficit was $388 billion, which is $78 billion more than Fiscal 2019.

The deficit for January 2020 increased by $55 billion due to February payments that were made in January. It was a timing shift that occurred because February 1 was a Saturday. A similar timing shift will occur in February, since March 1 will fall on Sunday. These timing shifts will equalize by the end of March, which is halfway through the fiscal year.

Excluding the $55 billion timing shift, the Fiscal 2020 deficit is approximately 7.5% higher than last year. Based on current projections, the U.S. deficit will exceed $1 trillion, which hasn’t happened since 2012.

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 April

The chart below tracks the monthly deficit or surplus of the U.S. government for the current fiscal year, in comparison to the prior year. The deficit through April (the first seven month of the fiscal year) was $531 billion. This is $145 billion more than the first seven months of Fiscal 2018.

According to a recent CBO projection, the U.S. deficit will be near $900 billion by September 30. This is expected to be $100 billion more than the Fiscal 2018 deficit, but less than the initial estimate of $1 trillion. In order to meet this projection, the deficit for the next five months will need to be nearly the same as May through September of 2018.

How likely do you think the federal deficit for the next five months will be equal to the deficit for the same period last year?

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 December

Below is a chart comparing the Fiscal 2019 deficit by month with Fiscal 2018. The cumulative deficit for the first quarter of 2019 is $317 billion, which is $92 billion more than the prior fiscal year.

Revenues for the first quarter were 1% higher than the prior year, and expenditures were 9% higher. It doesn’t take a financial genius to recognize the financial peril of expenditures growing much faster than revenues. It only works because the U.S. government continues to borrow money to sustain the spending. The U.S. will borrow nearly $1 trillion this year alone to maintain its rate of expenditures, and by the end of the fiscal year, the total U.S. debt will exceed $22 trillion.

What do you think about government revenues growing at 1%, while expenditures are growing by 9%?

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 2018 Deficit by Month

The graph below charts the monthly budget deficit or surplus of the U.S. government for the fiscal year ending September 30, 2018. The cumulative deficit for Fiscal 2018 was $782 billion, which was slightly less than initially projected.

Because of the timing for month-end payments, approximately $55 billion of expenditures that normally would have been paid in September, were paid in August. This timing difference caused the August deficit and September surplus to be much larger than normal.

As depicted in the graph, the government spent more than it receives nine months out of the year. The surpluses in January, April and September correspond with the timing of when estimated tax payments are due. However, the excess in these three months was not large enough to pay for the other nine months of overspending.

What do you think of a budget that overspends nine out of twelves months?

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 May

The chart below compares the monthly U.S. deficit for Fiscal 2018 with Fiscal 2017. Through the end of May, the current year deficit is $530 billion, which is nearly $100 billion more than last year. Given the overspending to date, the federal government will likely spend approximately $800 billion more than it collects this year.

One of President Trump's economic advisers recently claimed the deficit was declining. This simply is not true. The Fiscal 2018 deficit is projected to be $125-150 billion more than last year's deficit of $666 billion. Since the federal government has overspent by nearly $530 billion over the past 8 months,  there is no way the current deficit will be less than last year.

Do you think anyone believes the current deficit will be less than last year?

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?

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 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?

Fiscal 2018 Deficit through January

Below is a graph comparing the monthly federal deficit for Fiscal 2018 in comparison to Fiscal 2017.

The deficit for the first four months of the fiscal year was $174 billion. This is $17 billion higher than the deficit for the first four months of 2017. January's surplus is primarily driven by individuals who pay their last installment of 2017 estimated taxes in early January.

Starting January 1, 2018, the U.S. Treasury expects to receive less tax revenue as a result of the tax reform legislation passed in December 2017. To avoid a government shutdown last in early February, Congress also agreed increase defense and discretionary domestic spending. Therefore, you can expect to see a the deficit each month continue to exceed the prior year, for the rest of Fiscal 2018.

Are you concerned with a rising federal deficit?

The U.S. Deficit for Fiscal 2017 Through July

The graph below tracks the deficit of the U.S. government for this fiscal year, which ends September 30, in comparison to the monthly deficit for Fiscal 2016. For the first 10 months of the year, the cumulative deficit is $568 billion; $54 billion more than last fiscal year. 

Since July 1, 2017 fell on a Saturday, the federal government made a number of payments in June, that would traditionally be recorded in July. As a result of this timing difference, the June 2017 deficit was much larger, and the July 2017 deficit was less. When combined, the June and July 2017 monthly deficits are $30 billion more than the same two months of 2016.

The deficit for all of Fiscal 2016 was $587 billion. Since the federal government has already overspent by $568 billion for the first 10 months of this fiscal year, it's all but certain the Fiscal 2017 deficit will be higher than Fiscal 2016. This is significant because the deficit was initially projected to decline in Fiscal 2017 and Fiscal 2018, before starting a rapid increase in Fiscal 2019. Since the current year deficit will be higher than last year, the cycle of ever increasing deficits may have already started and will continue indefinitely unless Congress does something to move towards a balanced budget.

What's your reaction to the latest budget deficit numbers?

Mandatory Spending - Not Necessarily

Congress essentially classifies federal spending as either discretionary or mandatory.

Discretionary spending is not fixed or guaranteed and is subject to annual appropriations. Since it's discretionary, in theory anything can be added or eliminated. In practicality, only a small percentage of discretionary spending is actually subject to change. Consider regulatory agencies like the Food and Drug Administration (FDA) or Securities and Exchange Commission (SEC). These agencies might make some changes by adding staff, eliminating programs or shifting resources, but they can't dramatically alter operations every year. Therefore, most discretionary expenditures are somewhat fixed.

Mandatory spending doesn't require annual appropriations and is essentially on auto-pilot. The spending is typically based on some eligibility criteria and it expenditure is made as long as the criteria is met. Social Security, Medicare and Medicaid are the three largest types of mandatory spending. Although Congress treats mandatory expenditures as beyond of their control, all mandatory spending can be changed or eliminated by passing new legislation. For example, Congress can raise the age of eligibility for Social Security retirement benefits from 67 to 70 by passing a new law, which would cause Social Security spending to decrease for the year. Politically it may be difficult, but it can be done.

Although nearly two-thirds of all current federal spending is classified as mandatory and on auto-pilot. Congress has the Constitutional power to change any and all federal spending, if they choose; both discretionary and mandatory. In short... Congress controls all spending and balancing the budget may not be easy, but it can be done.