US Budget Deficit Widens Rapidly, Threatening Debt-Limit Timeline

The federal budget deficit is widening rapidly, according to the latest estimates by the Congressional Budget Office, raising the risk of the Treasury running out of cash earlier than expected amid a debt-ceiling standoff.

The excess of spending over receipts totaled $459 billion for the first four months of the fiscal year, which started Oct. 1, according to CBO estimates released on Wednesday. That’s a $200 billion increase over the same period a year earlier.

Treasury Secretary Janet Yellen has already deployed special accounting maneuvers to extend the time before her department will run out of cash, after the federal government hit the statutory $31.4 trillion debt ceiling last month. In mid-January, she indicated those maneuvers would last at least until early June.

The CBO figures show that spending is picking up, while revenues are coming in weaker than last year. In 2022, the Treasury enjoyed a record tax haul, thanks in part to booming job and wage growth, along with the powerful rallies in financial markets in 2021 that yielded funds via capital-gains levies. But market routs last year suggest tax revenues from that source will now be much weaker.

The Treasury typically releases its official monthly budget figures mid-month, so it hasn’t yet posted figures for January. For the three months through December, the Treasury reported a $421 billion deficit, some 12% worse than the previous year.