Are deficits in decline?

FACT SHEET: Are Deficits in Decline?

February 14, 2022 Last month, the federal government ran a surplus of $119 billion, the first monthly surplus since September 2019. The Fiscal Year 2022 deficit is slated to decline dramatically relative to 2021, and debt-to-GDP is likely to fall by the end of the fiscal year as well.

However, January’s surplus was largely the result of timing shifts and one-time events. Moreover, while deficits and debt-to-GDP are likely to fall in the near term due to waning COVID relief and rapid inflation, debt remains at a near-record level, and both are on course to grow rapidly in the near future.

Some helpful context:

1. Deficits will fall as temporary COVID relief ends, but debt will continue to grow.

  • Annual deficits averaged nearly $3 trillion per year in 2020 and 2021, twice the previous record
  • More than $2 trillion per year of this borrowing was from temporary COVID relief, and CBO projects deficits will return to $1.15 trillion in 2022 as this relief expires
  • While deficits will fall, the national debt will continue to rise by well over $1 trillion this year and nearly $13 trillion over the next decade

2. January’s $119 billion surplus was largely a mirage 

  • January is often a surplus month, as taxpayers pay quarterly estimated tax payments
  • Excluding timing shifts and one-time payments, the January surplus was just $14 billion, in line with the average over the decade before the COVID pandemic began
  • $81 billion of the official surplus was due to a one-time spectrum auction, while $24 billion was due to timing of payments that were scheduled to occur on a weekend or holiday

3. High inflation eroded current debt but not long-term fiscal challenges 

  • High inflation reduced the value of outstanding debt – debt-to-GDP fell from 104 percent of GDP at the end of calendar year 2020 to 101 percent at the end of 2021
  • High inflation also increases future spending on programs like Social Security and interest on the debt – a one-point increase in annual inflation will increase debt by $1.7 trillion by 2031
  • High inflation will also lead the Federal Reserve to react more aggressively – a one-point increase in projected interest rates will increase debt by $2.1 trillion by 2031
  • Debt is expected to remain far above its historical average of 46 percent and will reach a new record as a result of population aging, rising health care costs, and rising interest rates

Committee for a Responsible Federal Budget | 1900 M Street NW, Suite 850, Washington, DC 20036


  1. One estimate I saw about the interest cost of the national debt predicted, that within 10 years the nation could be spending more servicing debt, than the total we spend on national defense. Crazy! I think inflation above 5% is here to stay for the next few years. US I-Bonds are paying 7.12%. I have purchased $3,700 in I-Bonds so far and plan on purchasing a total of $10,000 worth by June. It sure bets the .05% that my credit union pays. I received 30 cents in interest last month.


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