U.S. Posts Widest Monthly Surplus Since 2008 on RevenueKasia Klimasinska
The U.S. posted its widest budget surplus in five years in April as an improving economy swelled tax revenue, easing pressure on lawmakers to lift the nation’s debt ceiling.
The surplus for the month when tax payments are due increased to $112.9 billion, the biggest since April 2008, from $59.1 billion a year earlier, the Treasury said in its monthly budget statement today in Washington. The median forecast in a Bloomberg survey of 24 economists was for an April surplus of $112 billion.
A strengthening economy is helping narrow a U.S. fiscal deficit that has exceeded $1 trillion in each of the past four years and pushed the Treasury Department near its legal borrowing limit. U.S. employers added 1.4 million workers in the October-April period, boosting government revenue and reducing the need to sell debt.
“This receipts surge has bought the Treasury a lot of time to stay under the debt limit,” Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, said in an interview. “Without the pressure of the debt limit, players in Washington have little incentive to come to a debt deal.”
The U.S. 10-year note yield was 1.89 percent at 4:09 p.m. in New York, after earlier touching the highest since March 26, according to Bloomberg Bond Trader prices.
For the first seven months of the 2013 financial year that began Oct. 1, the deficit shrank 32 percent to $487.6 billion from the same period from a year before.
Today’s report showed revenue rose 28 percent in April from the same month a year earlier, to $406.7 billion. Spending increased 13 percent to $293.8 billion, it showed.
President Barack Obama in February signed legislation suspending the $16.4 trillion debt limit through May 18. A later deadline would give Congress more time to debate the ceiling, one of the most controversial issues in Washington and the reason of 2011 political gridlock that led to Standard & Poor’s downgrade U.S. credit rating.
The debt limit will increase on May 19 to account for the deficits that accrued during the suspension period. The Treasury will then have to use its extraordinary measures to extend its borrowing authority and keep paying bills, unless the limit is raised or suspended again.
Treasury Secretary Jacob J. Lew, in an interview on CNBC earlier today, said the $59.4 billion dividend that Fannie Mae, the mortgage-financier seized by U.S. regulators in 2008, will pay the Treasury by the end of June will help avoid breaching the limit until at least Sept. 2.
The looming threat of hitting the debt ceiling won’t force Democrats to accept a deficit-cutting deal that they don’t like, said Maryland Representative Steny Hoyer, the No. 2 House Democrat.
“Pretending that you’re going to take hostage the creditworthiness of the United States of America to get your deal done is irresponsible and not realistic,” Hoyer said in an interview with Bloomberg Television’s Peter Cook for “Capitol Gains” airing May 12. ‘We’re not going to get a deal like that.’’
The U.S. Treasury on April 29 projected it will pay down some of the government debt this quarter for the first time in six years as tax receipts exceed forecasts and spending diminishes. The department has kept its quarterly refunding auctions of debt unchanged at $72 billion since November 2010.
Lawmakers in January let a two-percentage-point payroll tax cut expire and agreed to increase the marginal income-tax rates on taxable income of married couples above $450,000 and individuals above $400,000. Those changes increased the top tax rate on ordinary income to 39.6 percent and raised the top tax rates on capital gains and dividends.
On March 1, automatic federal budget cuts known as sequestration hit after Congress and the Obama administration failed to agree on alternative way to cut spending.
While forecast to decline to $430 billion in 2015, the U.S.’s annual deficit will start growing again later this decade and reach close to $1 trillion in 2023, as more baby boomers join the ranks of Medicare and Social Security beneficiaries, the Congressional Budget Office said in February.