The federal government cashed in big in April, climbing highest ever into the black.
The treasury received $515 billion and spent $297 billion, making for a record surplus of $218 billion, according to a Congressional Budget Office (CBO) estimate.
April is traditionally the best month for the federal budget—that’s when the government collects the bulk of tax payments for the previous year.
The previous record surplus of some $190 billion from April 2001 would be higher if adjusted for inflation.
Still, this April’s results are $30 billion to $40 billion higher than the CBO expected in its forecast less than a month ago.
CBO estimates can be off by a few billion. The Treasury is scheduled to release the official numbers on Thursday, May 10.
The record surplus materialized despite an 8 percent spending hike, compared to last April. The government spent $6 billion more to cover interest payments on its debt (up 21 percent April-to-April), while military spending rose by $4 billion (11 percent), Social Security benefits by $4 billion (5 percent), and Medicaid benefits by $3 billion (10 percent).
“Those payments were mostly related to economic activity in 2017 and may reflect stronger-than-expected income growth in that year,” CBO stated. “Part of the strength in receipts also may reflect larger-than-anticipated payments for economic activity in 2018.”
In short, people may have worked more, are getting paid more for the same amount of work, or both, resulting in more taxes.
Individual income and payroll taxes rose by $73 billion—20 percent—April-to-April.
In addition, withheld individual income tax and withheld payroll taxes rose by $7 billion (or 4 percent), despite people already paying less due to President Donald Trump’s historic tax cut bill. On the other hand, April had one more business day this year than the last, which also pushed the withheld tax a bit higher.
The economy has been on a streak of exceeding expectations thanks partly to the “Trump effect”—a boost to confidence in the economy linked to Trump’s cuts to regulations, taxes, and planned investment in infrastructure.
Household disposable income increased at a rate of 3.4 percent in the first quarter, accelerating from the previous quarter’s 1.1 percent pace. Households also boosted savings.
The government, however, hasn’t been so comfortable. Tax cuts combined with increased spending made for an extra poor February and March, both with deficits over $200 billion. Aside from ever-increasing Medicare, Medicaid, and Social Security bills, the higher inflation has pushed up interest payments on government debt. Trump’s boost to the military budget and a hike in disaster relief spending added to it too.
Reuters contributed to this story.