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Every month the U.S. Treasury releases data on the federal budget, including the current deficit. The following contains budget data for August 2021, which is the eleventh month of fiscal year (FY) 2021.
The deficit for August 2021 was $29 billion less than the deficit recorded in August 2020. In both years, certain federal payments were shifted into July because August 1 fell on a weekend. Without those shifts, the deficit for August 2021 would have been $26 billion less than the deficit for August 2020.
That decrease in the deficit was primarily due to a 20 percent increase in receipts, partially offset by a 4 percent increase in outlays. The increase in federal revenues was primarily driven by higher income and payroll taxes associated with the current economic recovery.
The cumulative deficit for the first 11 months of FY21 was $297 billion smaller than it was through the same period in FY20. The decrease in the cumulative deficit reflects a growth in revenues this year of $540 billion, partially offset by a $243 billion increase in spending.
The substantial growth in revenues was driven by the general strength of the economy over the past year, which has led to increases in individual and corporate income tax receipts. The growth in outlays is primarily due to the programs and policies implemented in response to the pandemic.
The sizeable deficit in FY20, and so far in FY21, has pushed up the current amount of debt held by the public by more than 25 percent relative to its level from before the onset of the COVID-19 pandemic. As the situation stabilizes, policymakers should turn their focus to the country’s underlying fiscal situation.