Yesterday, CBO issued its Monthly Budget Review, which discussed the status of the federal budget through the end of June, encompassing the first nine months of fiscal year 2020. At that point, the deficit was about $1.0 trillion, about $80 billion dollars less than the shortfall last year at this time.
Revenues were about the same as they were last year ($1.6 trillion)---reflecting increases in receipts from corporate income taxes and from the Federal Reserve's payments to the Treasury, which were largely offset by decreases in individual income and payroll taxes. Receipts from corporate income taxes were up by about $31 billion (or 31 percent), the result of both improved economic conditions and lower depreciation charges. Receipts from the Fed increased by $35 billion, primarily because the central bank has increased the amount of assets it holds and has shifted to riskier investments in support of the housing market and the broader economy. In contrast, receipts from individual income and payroll taxes declined by $57 billion (or 4 percent), mostly because nonwithheld payments reflecting 2009 tax liabilities were lower. Withheld taxes have dropped as well (by about 2 percent)---but declines during the first part of the fiscal year were followed by increases in each of the past four months (compared with receipts in the same months last year).
Spending during the first nine months of the fiscal year was $2.6 trillion---about $70 billion (or 3 percent) less than outlays at the same point in 2009. That decline includes a net reduction of about $350 billion in major components of spending related to the recent financial crisis---the Troubled Asset Relief Program, Treasury payments to Fannie Mae and Freddie Mac, and net outlays for federal deposit insurance. Spending for all other federal activities rose by almost $280 billion (or 11 percent). Payments of unemployment benefits increased by $41 billion (or almost 50 percent) and interest on the public debt was up by about 20 percent. Outlays for Medicaid rose by 9 percent, and defense spending and payments of Social Security benefits were both 6 percent higher. Spending for food and nutrition assistance, the State Fiscal Stabilization Fund (created by the American Recovery and Reinvestment Act), student aid, and refundable tax credits also increased significantly.
The Monthly Budget Review was prepared by Elizabeth Cove Delisle and Daniel Hoople of CBO's Budget Analysis Division, and by Barbara Edwards and Joshua Shakin of our Tax Analysis Division.