The federal budget deficit was $944 billion in the first 11 months of fiscal year 2022 (that is, from October 2021 through August 2022), the Congressional Budget Office estimates—$1.8 trillion less than it was at the same point last year. Revenues were $822 billion (or 23 percent) higher and outlays were $945 billion (or 15 percent) lower than they were during the same period a year ago. Revenues in all major categories rose, especially individual income taxes. Spending related to the coronavirus pandemic declined, particularly for the recovery rebates (also known as economic impact payments), unemployment compensation, pandemic relief through the Small Business Administration (SBA), and relief to state, local, tribal, and territorial governments.
On August 24, 2022, the Administration announced plans to forgive certain portions of federal student loans for many borrowers and other changes to the student loan program. CBO’s budget estimates through August do not include outlays related to those actions because the Administration had not recorded any related costs.
Ordinarily, with just one month left in the fiscal year, projecting the annual deficit would berelatively straightforward. This year, however, the announced changes to the student loan program add significant uncertainty because they may lead to the recording of substantial outlays in September. Under the Federal Credit Reform Act, the estimated long-term effects of such changes to the terms of outstanding loans are recorded as an increase in outlays in the month when those terms are changed. This year, both the timing and the amounts of the changes to the student loan program are uncertain. Without the changes to student loans, CBO’s projection of the 2022 budget deficit would be about $1.0 trillion, compared with a $2.8 trillion shortfall last year. If significant numbers of student loans are modified in September, the 2022 deficit could be considerably larger than CBO has estimated. Some of the announced changes (such as the changes to income-driven repayment plans) will increase deficits in future years.