- The Fiscal
- What We're
- What You
Every month the U.S. Treasury releases data on the federal budget, including the current deficit. The following contains budget data for September 2021, which was the final month of fiscal year (FY) 2021. Therefore, it also allows for an analysis of full-year data on the deficit, spending, and revenues.
The deficit for September 2021 was $63 billion less than the deficit recorded in September 2020. That decrease in the deficit was primarily due to a 23 percent increase in revenues, which was partially offset by a 5 percent increase in outlays. The increase in federal revenues was primarily driven by higher income and payroll taxes associated with the current economic recovery.
Looking at full-year data, the FY21 deficit was $360 billion smaller than the FY20 deficit. The decrease in the deficit reflects a growth in revenues this year of $626 billion, partially offset by a $266 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 $2.8 trillion deficit in FY21 resulted in a $1.3 trillion increase in debt held by the public, with Treasury financing the rest of the deficit by drawing down existing cash balances. Since the onset of the COVID-19 pandemic, debt held by the public has increased by more than 25 percent. Once the situation has stabilized, policymakers should turn their focus to the country’s underlying fiscal situation.