It may seem a bit odd to talk about a budget surplus at a time of soaring deficits, but tax receipts are coming in stronger than expected in April and the Congressional Budget Office is now projecting a record surplus for the month.
The preliminary estimate for tax receipts in April is $515 billion, about $40 billion higher than the CBO expected just a month ago, and $59 billion more than collected in April 2017. Most of the increase is from larger-than-expected individual income tax payments, likely due to stronger-than-expected economic activity since last fall. Corporate income tax payments fell by $14 billion (24 percent) compared to last year, likely driven by both lower final payments for 2017 and the reduction of the corporate tax rate from 35 percent to 21 percent this year.
Total spending in April increased to $297 billion, $24 billion more than a year ago. The largest increase in outlays was for net interest on the public debt, which rose by $6 billion year-over-year, or 21 percent. Social Security benefit payments increased by $4 billion (5 percent), military spending increased by $4 billion (11 percent), and Medicaid payments rose by $3 billion (10 percent).
The net result is a surplus of $218 billion in April, which breaks the record of $190 billion recorded in April 2001.
The larger trend, however, runs decidedly in the opposite direction. For the first seven months of the 2018 fiscal year, which began in October, the overall deficit came to $382 billion, $37 billion more than the first seven months of 2017. And CBO projects a full-year deficit of $804 billion in 2018, with trillion-dollar deficits coming in 2020.