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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 March 2022, which was the sixth month of fiscal year (FY) 2022.
The federal government ran a deficit of $193 billion in March 2022, an improvement of $467 billion from the deficit that was recorded in March 2021. This March, outlays were $419 billion lower than they were in the same month last year, and revenues were $48 billion higher. The large reduction in outlays was the result of lower spending on three coronavirus-related programs: recovery rebates, unemployment compensation, and the Paycheck Protection Program.
The cumulative deficit for the first six months of FY22 was $1,038 billion (or around 60 percent) lower than it was through the first six months of FY21, reflecting a $620 billion decrease in outlays and a $418 billion increase in revenues.
The large decrease in outlays is due to the waning federal response to the COVID-19 pandemic. The first six months of FY22 did not include any recovery rebates, whereas the first six months of FY21 included two separate rounds of such payments. In addition, spending on unemployment compensation and programs administered by the Small Business Administration, most notably the Paycheck Protection Program, were much lower in the first six months of FY22.
The primary driver of increased receipts were individual income and payroll taxes resulting from stronger economic growth. Higher wages and salaries led to larger amounts being withheld from workers’ paychecks. In addition, certain payroll tax collections were delayed until FY22 as a result of legislation enacted last year in response to the pandemic.
Since the onset of the COVID-19 pandemic, debt held by the public has increased by 35 percent, and is projected to grow significantly over the next 10 years. While the Biden Administration’s recent budget proposes some deficit reduction relative to the baseline, debt would still climb to a record high. Now that the worst of the COVID-19 pandemic is behind us, it is time to chart a comprehensive path to a sustainable fiscal future.