US Starts Off Fiscal 2021 With Largest Two-Month Budget Deficit On Record

Two months after the Treasury announced that the US ended fiscal 2020 with a staggering, record $3.1 trillion budget deficit, more than triple the prior year’s $954 billion as a result outlays of $6.552 trillion, almost double the receipts of $3.420 trillion, today we learned that the US started off fiscal 2021 in “helicopter money” style, and in the first two months month of the (fiscal) year, the budget deficit was a whopping $429 billion, $86 billion more than the same two-month periof a year ago, and the biggest two-month deficit to start a fiscal year on record. That said, just for November, the deficit was $145.3 billion, somewhat better than the $200 billion expected deficit, and certainly an improvement to the $208.8BN deficit last November, and the $284BN deficit in October.

Specifically according to the Treasury, in November, government outlays were $364.8 billion, down $157f billion rom the $521.8 billion spent in October, and 15.9% less than the $434  billion the US spent last October…

… and while spending shrank in November, so did receipts which declined from the $237.7 billion received in October to $219.6 billion in November, and down -2.5% from the $225.5 billion received last November (the question of why anyone still pays taxes in a time of helicopter money, when the Fed simply purchases whatever debt the Treasury issues, remains).

The chart below shows the November and YTD (fiscal) 2021 breakdown between various receipts and outlays. It reveals that the bulk of the total $457BN in receipts came from Individual Income Taxes ($203BN) and from Social Security and Retirement payments ($202BN), while the biggest spending categories were Social Security ($185BN), National Defense ($134BN), Income Security ($130BN) and Health ($19BN). Net interest on public debt was “only” $62 billion, but this number can only grow.

Finally putting the October and November number in context, it was the largest two-month deficit to the start of a fiscal year on record.