U.S. DEFICIT in July down 30% from last year.

Receipts decrease from June by 52% as tax season recedes

The federal government reported a $211 billion monthly budget deficit in July, a 30% drop from the $302 billion deficit posted a year ago.

Money coming into the government decreased about 52% from June as less money trickled in from tax season, though receipts increased about 3% from a year ago.

“The closer you are to April, the more you continue to get receipts in as people file [taxes] later, and the fact that it increased compared to last year is obviously because the economy is on much stronger footing this year than it was last year,” Mervin Jebaraj, director for the Center for Business and Economic Research at the University of Arkansas, said Wednesday.

Government spending fell by 15% in July from one year prior.

For the first 10 months of fiscal year 2022, the yearto-date budget deficit also dropped by 71% to $726 billion compared to the same period a year ago.

This decrease in federal spending is likely because the government is spending less on pandemic-related supplies, Jebaraj said.

Government spending last July was higher because of the $1.9 trillion American Rescue Plan Act, which passed in March of last year.

“This time last year, we were still purchasing vaccines in bulk, we were still buying masks and tests and all kinds of other pandemic-related expenses in bulk, the federal government was doing that for the states and sending it to states, to hospitals, to schools and so forth, so all of that is no longer happening at the level that it was last year,” Jebaraj said.

“But also, some of the other specific things in the American Rescue Plan Act last year around childcare tax credits, that would have reduced the government’s revenues that they were taking in, that is no longer in effect right now, so that’s another instance where the government is bringing in more money [this year] because they are no longer providing the childcare tax credits they were last year.”

The Inflation Reduction Act, which cleared the U.S. Senate this week and faces a House vote soon, aims to lower the government’s budget deficit over the next few years.

The measure as proposed aims to generate $300 billion toward deficit reduction over the next ten years and reduce carbon emissions by roughly 40% by 2030.

“It’s not a significant chunk of money when you compare it to the overall size of the U.S. government’s spending,” Jebaraj said about the amount the bill proposes to contribute to U.S. deficit reduction.

Jebaraj said the impact on the federal budget would also happen over time, if the act passes.

Accumulating deficits add to the overall federal debt, which totaled nearly $30.6 trillion this week. That figure includes more than $6.6 trillion the government owes itself, including about $2.9 trillion borrowed from the Social Security Trust Fund, according to Treasury Department reports.

Government spending fell by 15% in July from one year prior.