U.S. Federal Budget Deficit in January

By David Lawder
Washington (Reuters)

The federal government reported a $129 billion budget deficit for January, a significant increase from the unusually low $22 billion deficit in January 2024. The increase is attributed to benefit payment calendar shifts and rising expenditures for Social Security, Medicare, interest, and other costs, as stated by the U.S. Treasury on Wednesday.

The January results, the last reflecting the fiscal management under former President Joe Biden’s administration, indicated that January receipts grew by 8% or $36 billion from a year prior, totaling $513 billion. Meanwhile, January outlays surged by 29% or $143 billion from a year ago, reaching $642 billion.

Excluding calendar shifts, such as the payment of $87 billion in February benefits at the end of January, the Treasury adjusted the deficit increase for the month to $21 billion instead of the reported $107 billion.

A Treasury official stated there are no current plans to include savings identified by Elon Musk’s unofficial Department of Government Efficiency (DOGE) in the Monthly Treasury Statement. Little evidence of tangible savings from the DOGE initiatives has surfaced, and Musk’s team’s access to the Treasury’s payment system has caused controversy, prompting a judge to issue a temporary restraining order excluding Treasury Secretary Scott Bessent.

The Treasury disclosed a record $840 billion U.S. deficit for the first four months of fiscal 2025, beginning October 1, reflecting an increase of 58% or $308 billion year-on-year. A Treasury official attributed this increase partly to prior year tax receipts being inflated by $85 billion in deferred tax payments from the previous fiscal year.

Year-to-date receipts reached $1.596 trillion, up 1% or $11 billion from the same timeframe last year, while total outlays reached $2.436 trillion, a 15% or $319 billion increase from the prior year. Both outlays and receipts reflect record figures for the first four months of fiscal 2025, according to the Treasury official.

FEMA Spending Impact

Tax receipts year-to-date showed a 6% increase in individual withheld taxes, but significant declines were noted in non-withheld and corporate tax receipts. Weather-related tax deferrals in 2023 pushed many payments into the first months of fiscal 2024, inflating prior-year comparisons.

Customs receipts during the first four months of fiscal 2025 increased by $3 billion or 12%, although this does not account for President Donald Trump’s recently imposed 10% tariff on Chinese imports, effective February 4.

Year-to-date outlays increased by 43% or $12 billion for the Department of Homeland Security due to raised hurricane and California wildfire relief expenses. Additionally, public debt interest expenses rose by 10% or $35 billion, totaling $392 billion. Military spending in the same period saw a 13% increase or $35 billion, reaching $318 billion. Outlays for Social Security, the largest expense item, rose by 8% or $41 billion, totaling $529 billion.