Revenue exceeded spending by $53 billion in December, a record budget surplus for the month that reflects the U.S. government’s success at cutting deficits in recent years.
The record surprised analysts, who had expected a $44 billion surplus for the month. The jump is due in large part to big payments from the government-backed housing finance agencies Fannie Mae and Freddie Mac, according to Bloomberg. Those companies have now paid the government over $185 billion since they were taken over by taxpayers in 2008, including $34 billion in December. Rising tax revenues from the gradually improving economy have also been helping to shrink deficits in recent years.
While falling annual deficits and record monthly surpluses are a sign of success for spending hawks, it’s not a good thing for the American economy. With unemployment still very high and millions giving up on finding work after years of fruitless post-recession job hunting, many economists would argue the government needs to be spending aggressively to boost economic growth. Instead, the government is investing less in the economy now than at any time since World War II. The Federal Reserve’s radical bond-buying program — the only thing that kept the economy from sliding into a recession thanks to the trillions of dollars’ worth of austerity measures enacted since 2010 — begins to wind slowly down this month, potentially exacerbating the negative impacts of the government’s thriftiness.
News of the monthly surplus record comes just days after the paltry December jobs report showed only 74,000 net jobs gained nationwide in the final month of 2013. That was far below both what economists expected (200,000 jobs) and the monthly average for 2013 (182,000 jobs). Thanks to the spending cuts zeal of recent years, the immediate future is dim for the millions of Americans who have been out of work for more than six months and therefore rely upon Emergency Unemployment Compensation (EUC) from the federal government. Congressional negotiators failed to extend that program in last year’s budget deal, and Republicans are now blocking efforts to reinstate the lapsed benefit program. State economies lost $400 million in economic activity in just the first week after the program dried up.