The Congressional Budget Office is reporting that the federal government took in $515 billion in April.  With outlays of only $218 billion, the $190-billion surplus represents the largest in history.

What's more, the CBO said the surplus is $40 billion more than expected.

Washington Times:

Analysts said they'll have a better idea of what's behind the surge as more information rolls in, but for now said it looks like individual taxpayers are paying more because they have higher incomes.

"Those payments were mostly related to economic activity in 2017 and may reflect stronger-than-expected income growth in that year," the analysts said in their monthly budget review.  "Part of the strength in receipts also may reflect larger-than-anticipated payments for economic activity in 2018.  The reasons for the added revenues will be better understood as more detailed information becomes available later this year."

Official numbers are due out from the Treasury Department in a few days, but the CBO is usually accurate to within a couple billion dollars.

April is always a strong month for government finances, with taxpayers filing their returns for the previous year and settling up what they owe, even as expenditures often dip for the month.

But this year was particularly strong, with receipts jumping 13 percent compared to a year ago.

Caution in analyzing these numbers is called for because 1) it's only a single month of reporting and 2) the spending increases have yet to fully work their way through the budget.

But the strong revenue numbers suggest that the tax cut is having its desired effect.  And while it probably won't offset the huge spending increases from the budget deal, there's a chance that future deficits will not be as catastrophic as predicted.

Nevertheless, the rise in inflation – even a small rise – is worrying because of the increased costs in servicing the debt.  While the increase in wages has been some of the best news coming from the tax cut, it also is a major driver of inflation as the Fed ramps up interest rates to tamp down rising costs.  And with the labor market as tight as it is, the possibility of rising wages leading to more inflation means further increases in interest rates – bad news for the budget deficit.

It will be interesting to see how the revenue stream will be affected by the tax cuts and if smaller than expected deficits are the result.