Monthly Budget Review: November 2022

The federal budget deficit totaled $335 billion in October and November 2022, the first two months of fiscal year 2023, the Congressional Budget Office estimates. That amount is $21 billion less than the deficit recorded during the same period last fiscal year: Revenues this year were $5 billion (1 percent) higher and outlays were $16 billion (2 percent) lower.

Outlays in the new fiscal year were reduced by the shift of certain payments—totaling $63 billion—from October 1, 2022 (the first day of fiscal year 2023), into fiscal year 2022 because October 1 fell on a weekend. If not for that, the deficit so far in 2023 would have been $399 billion, $42 billion greater than the shortfall in the first two months of fiscal year 2022.

Table 1.
Budget Totals, October–November
Billions of Dollars
							Estimated Change With Adjustments for Timing Shifts in Outlaysa
	Actual, FY 2022		Preliminary, FY 2023		Estimated Change		Billions of Dollars		Percent
Receipts	565		570		5		5		1
Outlays	922		906		−16		47		5
Deficit (−)	−356		−335		21		−42		12
Data sources: Congressional Budget Office; Department of the Treasury. Based on the Monthly Treasury Statement for October 2022 and the Daily Treasury Statements for November 2022. FY = fiscal year. a. Adjusted amounts exclude the effects of shifting payments that otherwise would have been made on a weekend. If not for those shifts, the budget would have shown a deficit of $399 billion rather than $335 billion from October 2022 through November 2022, CBO estimates.

Total Receipts: Up by 1 Percent in Fiscal Year 2023

Receipts totaled $570 billion during the first two months of fiscal year 2023, CBO estimates—$5 billion more than during the same period a year ago. The changes from last year to this year were as follows:

• Individual income and payroll (social insurance) taxes together rose by $17 billion (or 3 percent).
  • Amounts withheld from workers’ paychecks rose by $20 billion (or 4 percent), most likely reflecting higher total wages and salaries.

Table 2.
Receipts, October–November
Billions of Dollars
							Estimated Change
Major Program or Category			Actual, FY 2022		Preliminary, FY 2023		Billions of Dollars		Percent
Individual Income Taxes			282		292		10		4
Payroll Taxes			216		223		7		3
Corporate Income Taxes			15		14		−1		−6
Other Receipts			51		41		−11		−21
		Total	565		570		5		1
Memorandum:
Combined Individual Income and Payroll Taxes
	Withheld taxes		460		479		20		4
	Other, net of refunds		39		36		−3		−8
		Total	498		515		17		3
Data sources: Congressional Budget Office; Department of the Treasury. FY = fiscal year.

• • Unemployment insurance receipts (one type of payroll tax) were $7 billion (or 52 percent) lower this year. Last year, those receipts were larger because states were replenishing the balances in their unemployment insurance trust funds, at least in part by collecting more in unemployment taxes from employers. (The trust funds had been depleted by unusually high unemployment beginning in March 2020.) Those collections count as federal revenues, reflecting the nature of the unemployment insurance system, which is a federal program administered by the states.
  • Nonwithheld payments of income and payroll taxes rose by $16 billion (or 32 percent). That increase is explained by payments made in October primarily for 2021 tax liabilities.
  • Individual income tax refunds increased by $12 billion (or 49 percent), reducing net receipts. Most refunds are typically paid during the period from February through April.
• Collections of corporate income taxes decreased, on net, by $1 billion (or 6 percent). Because tax receipts in October and November generally represent a small percentage of the annual total, the amounts for those two months are not a significant indicator for the entire fiscal year. For most corporations, the first quarterly estimated payment in fiscal year 2023 will be due on December 15.
• Receipts from other sources, on net, decreased by $11 billion (or 21 percent).
  • Remittances from the Federal Reserve decreased from $15 billion to less than $1 billion. Higher short-term interest rates have raised the central bank’s interest expenses above its income, causing the decline.
  • Miscellaneous fees and fines increased by $2 billion (or 65 percent).

Total Outlays: Down by 2 Percent in Fiscal Year 2023

Outlays in the first two months of fiscal year 2023 were $906 billion, $16 billion less than during the same period last year, CBO estimates, the net result of increases and decreases in various programs. Fiscal year 2023 outlays were affected by shifts in the timing of certain federal payments that otherwise would have been due on October 1, 2022, which fell on a weekend (those payments were made in September 2022). If not for those shifts, outlays so far in fiscal year 2023 would have been $47 billion (or 5 percent) greater than outlays during the same two months in fiscal year 2022. The discussion below reflects adjustments to exclude the effects of those timing shifts.

Outlays for the largest mandatory spending programs increased by $36 billion (or 9 percent):

• Spending for Social Security benefits rose by $17 billion (or 9 percent) because of increases both in the number of beneficiaries and in the average benefit payment.
• Medicare outlays increased by $12 billion (or 11 percent) because of changes in payment rates and in patterns of use by beneficiaries.
• Medicaid outlays increased by $7 billion (or 7 percent) as a result of enrollment increases mainly attributable to the Families First Coronavirus Response Act, which requires states to maintain the eligibility of all enrollees until the end of the public health emergency.

Table 3.
Outlays, October–November
Billions of Dollars
									Estimated Change With Adjustments for Timing Shifts in Outlaysa
Major Program or Category			Actual, FY 2022		Preliminary, FY 2023		Estimated Change		Billions of Dollars		Percent
Social Security Benefits			191		208		17		17		9
Medicareb			113		88		−25		12		11
Medicaid			88		94		7		7		7
	Subtotal, Largest Mandatory Spending Programs		392		391		−1		36		9
Refundable Tax Creditsc			49		17		−33		−33		−66
Unemployment Compensation			9		4		−5		−5		−56
Small Business Administration			8		*		−7		−7		−96
Coronavirus Relief			2		3		*		*		13
DoD—Militaryd			126		132		5		10		8
Net Interest on the Public Debt			61		93		32		32		53
Other			274		267		−7		13		5
		Total	922		906		−16		47		5
Data sources: Congressional Budget Office; Department of the Treasury. DoD = Department of Defense; FY = fiscal year; * = between zero and $500 million. a. Adjusted amounts exclude the effects of shifting payments that otherwise would have been made on a weekend. If not for those timing shifts, outlays would have been $969 billion in fiscal year 2023. b. Medicare outlays are net of offsetting receipts. c. Recovery rebates, earned income tax credit, child tax credit, premium tax credits, and American Opportunity Tax Credit. d. Excludes a small amount of spending by DoD on civil programs.

Several large decreases in outlays were related to the evolving federal response to the pandemic:

• Outlays for certain refundable tax credits totaled $17 billion—a decrease of $33 billion, or 67 percent.¹ That reduction occurred because advance payments of the child tax credit ended. (They had been made between July and December 2021.)
• Outlays from the Public Health and Social Services Emergency Fund (included in “Other” in Table 3) decreased by $8 billion (or 41 percent) as expenditures decelerated for several pandemic-related activities, including reimbursements to hospitals and other health care providers, spending on coronavirus testing and contact tracing, and development and purchase of vaccines and therapies.
• Spending by the Small Business Administration decreased by $7 billion. In the first two months of fiscal year 2022, that agency recorded nearly $8 billion in outlays, primarily for disaster loans and for grants to operators of shuttered entertainment venues. Those outlays trailed off toward the end of fiscal year 2022, and there have been few such outlays this fiscal year.
• Outlays for unemployment compensation decreased by $5 billion (or 56 percent) because fewer people were receiving unemployment benefits.

Outlays increased substantially in four areas:

• Net outlays for interest on the public debt increased by $32 billion (or 53 percent), primarily because interest rates are significantly higher than they were in 2022.
• Spending by the Department of Education (also in “Other”) increased by $11 billion primarily because the Administration recorded some of the costs associated with final rules, published on November 1, 2022, modifying student loan repayments. Those rules expanded eligibility for the discharge of loans, eliminated the addition of unpaid interest to loan balances in certain circumstances, and increased eligibility for the Public Service Loan Forgiveness program.
• Spending by the Department of Defense was $10 billion (or 8 percent) greater than in the same period last fiscal year; the largest increase was in research and development.
• Spending for several programs administered by the Department of Agriculture (also in “Other”) increased by $5 billion (or 71 percent). That rise is attributable mostly to payments of crop insurance claims and to loan forgiveness for certain farm borrowers.

Estimated Deficit in November 2022: $248 Billion

The federal government incurred a deficit of $248 billion in November 2022, CBO estimates—$56 billion more than the deficit recorded last November. Revenues were lower this November than they were a year ago; outlays were higher.

Table 4.
Budget Totals for November
Billions of Dollars
						Estimated Change
	Actual, FY 2022			Preliminary, FY 2023		Billions of Dollars		Percent
Receipts	281			251		−30		−11
Outlays	473			499		27		6
Deficit (−)	−191			−248		−56		−29
Data sources: Congressional Budget Office; Department of the Treasury. FY = fiscal year.

CBO estimates that receipts in November 2022 totaled $251 billion—$30 billion (or 11 percent) less than those recorded in the same month last year. That decrease was driven largely by income and payroll taxes, which fell by $23 billion (or 9 percent). Also, remittances from the Federal Reserve dropped by $8 billion.

Total spending in November 2022 was $499 billion, CBO estimates—$27 billion (or 6 percent) more than last year. That overall change is the net result of increases and decreases in several areas. The largest increases were as follows:

• Net outlays for interest on the public debt increased by $18 billion (or 55 percent), primarily because interest rates are significantly higher than they were in 2022.
• Spending by the Department of Education increased by $11 billion (or 92 percent).
• Outlays for Medicare increased by $10 billion (or 16 percent).
• Outlays for Social Security increased by $9 billion (or 9 percent).
• Outlays for international assistance increased by $3 billion (or 80 percent).
• Outlays for Medicaid increased by $3 billion (or 7 percent).

The largest decreases were as follows:

• Outlays for certain refundable tax credits decreased by $16 billion (or 68 percent).
• Spending by the Small Business Administration decreased by $5 billion (or 99 percent).
• Outlays from the Public Health and Social Services Emergency Fund decreased by $4 billion (or 32 percent).

Spending for other programs and activities increased or decreased by smaller amounts.

Actual Deficit in October 2022: $88 Billion

The Treasury Department reported a deficit of $88 billion for October—$5 billion more than CBO estimated last month, on the basis of the Daily Treasury Statements, in the Monthly Budget Review: Summary for Fiscal Year 2022.

1. Those credits are the recovery rebates, earned income tax credit, child tax credit, premium tax credits (which subsidize the purchase of health insurance under the Affordable Care Act), and American Opportunity Tax Credit. ↑