So much for all that talk about falling deficits.
The federal government ran a $249 billion deficit during the month of November—that's the largest total ever posted for that month, and a staggering $56 billion increase over the deficit from November 2021. Treasury Department data released this week show the government spent $501 billion during the month but collected just $252 billion in tax revenue, meaning that nearly 50 cents of every dollar spent were borrowed and added to the national debt. That's utterly unsustainable.
And now Congress is gearing up to spend even more.
Though the final details of a lame-duck session omnibus bill won't be known until next week (likely not until just before lawmakers are asked to vote on it), it's a near certainty that the final agreement will add to this year's budget deficit and the ballooning national debt. Congress passed a short-term spending deal on Thursday night to avert a government shutdown and give lawmakers another week to hammer out a more comprehensive deal to fund the government through the end of the current fiscal year. That larger omnibus bill could include billions of dollars in additional military and humanitarian aid for Ukraine, as well as emergency funds for hurricane relief, The Washington Post reports. The final price tag is likely to be about $1.7 trillion, according to Politico.
Depending on what else ends up in the final version of the end-of-year omnibus, the package will add between $240 billion and $585 billion to this year's budget deficit, according to an analysis by the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for balancing the books. Over the 10-year budget window used by the Congressional Budget Office and other number crunchers to assess the federal budget, the damage could exceed $5 trillion.
"Not only would these policies increase deficits, but they would also worsen inflation," the CRFB warns in its analysis. "With inflation surging and debt approaching record levels, policymakers should avoid passing costly end-of-year policy changes."
For much of the past year, the Biden administration has been touting falling deficit figures as evidence that the economy was picking up and, implicitly, as a signal that government spending could increase without adding to the nation's tenuous fiscal situation. That was always misleading, as the falling deficit was entirely the result of one-time, emergency COVID-19 spending coming off the books. The underlying figures showed all along that the deficit situation was continuing to worsen, and that President Joe Biden's policies were adding trillions of dollars to the deficit over the long term.
November's spending and revenue figures should put an end to these silly games. We're only two months into the fiscal year, but the federal government is now on pace to run a deficit of about $1.9 trillion, which would be the largest nonpandemic budget deficit ever and a huge increase from the $1.38 trillion deficit in the fiscal year that ended on September 30.
A major driver of November's rapidly expanding deficit was something else that fiscal hawks have been warning about for a while: higher borrowing costs created by higher interest rates. The Wall Street Journal notes that the federal government spent 53 percent more on borrowing costs last month than it did in November 2021.
The best time to stop borrowing heavily was yesterday (or several years ago), but the second-best time would be today. Instead, Congress is likely to make this problem even worse—again—by continuing to spend like there's no tomorrow.