Perhaps the biggest surprise came from the U.S. federal government, which reported a $27.4 billion surplus for June. This is a huge turnaround from the $316 billion deficit that was reported for May. This encouraging financial picture comes mainly from a 7% bump in year-to-date receipts. A remarkable 13% increase in corporate income tax receipts from the same month last year has fueled this expansion. Total interest payments on the national debt, however, continue to be a point of serious concern. In just June alone, net interest totaled $84 billion, with the year-to-date totals coming to $749 billion so far this FY.
Today, our national debt is all that much more astounding at the cusp of $36 trillion. The Congressional Budget Office forecasts that recent spending proposals from former President Donald Trump could add approximately $3.4 trillion to this figure over the next decade. In FY2023, interest payments are on pace to exceed $1.2 trillion. Such an unprecedented surge brings with it highly troubling questions about the sustainability of our current fiscal policies.
In June, the government benefited from an unusual drop in outlays, down by 7%. This cut increased the positive surplus. It followed his push for a cap on the long trend of rising spending and the average 6% spending hike this year. While June’s results are encouraging, the fiscal year-to-date deficit remains at a hefty $1.34 trillion. That’s a 1% drop from the same time last year.
The Federal Reserve is under a microscope. At the same time, Trump is calling on the Federal Reserve to cut short-term interest rates in order to spur economic growth – even as the national debt approaches $22 trillion. The government’s fiscal outlook is subject to near-continuous revision. With just three months left in the fiscal year, which ends Sept. 30, federal officials are watching the development with great attention.
June’s surplus therefore represents a remarkable turnaround. It’s a remarkable turnaround from just one year ago, where the government was looking at a terrifying $71 billion deficit for the same month. The variations in financial performance illustrate the complexities of managing national finances in the face of competing pressures such as rising interest payments and increasing debt obligations.