In a recent development, the U.S. Treasury has revealed a surplus from last month, thanks to the influx of tax payments received by the April 15th deadline. However, despite this positive news, the federal government is projected to end the fiscal year with a deficit surpassing $1.5 trillion.

April tax receipts experienced a significant boost, totaling $776 billion, marking a notable 22% increase compared to the previous year. Treasury officials attribute this surge to a combination of a growing number of people joining the workforce and rising wages.

On the spending front, the government saw a 23% rise in expenditures compared to the same period last year. Of the various expenditures, the largest increase amounted to $26 billion, primarily driven by higher interest payments on the federal debt. This increase can be attributed to the rising debt levels and the prevalence of high interest rates.

As of now, the federal government's spending has outpaced tax receipts by $855 billion, reflecting a deficit that is 8% smaller than the previous year at this point in time. Despite the strong economy and an unemployment rate below 4%, the size of the deficit remains notably high.

White House economic adviser Lael Brainard, speaking at the Brookings Institution, identified the 2017 tax cut as a significant contributor to the current deficit. Brainard argued that the Trump and Bush tax cuts, along with their extensions, have added a staggering $10 trillion to the national debt, accounting for 90% of the non-emergency increases in the debt-to-GDP ratio since 2001.

Looking ahead, a battle in Congress looms as large parts of the 2017 tax cut are set to expire next year. Republicans intend to extend the tax cuts while also providing additional tax relief to corporations and wealthy heirs. On the other hand, President Biden aims to extend the cuts solely for individuals earning less than $400,000, while proposing an increase in the corporate tax rate from 21% to 28%.

It is worth noting that extending the 2017 tax cuts, as estimated by the Joint Committee on Taxation, could potentially add over $5 trillion to the deficit over the next decade. This further underscores the importance of finding a balance between economic stimulus and fiscal responsibility.

As the debate intensifies in Congress, the future trajectory of the deficit and its long-term impact on the economy remain key focal points that will shape policy decisions in the coming months.