The federal government incurred a budget deficit of $830 billion in the first six months of fiscal year 2011, CBO estimates in its latest Monthly Budget Review—$113 billion more than the shortfall recorded in the same period last year.
Outlays for the first half of fiscal year 2011 were $179 billion (or 11 percent) higher than outlays during the same period last year, CBO estimates. That increase is almost entirely explained by adjustments to the expected cost of the Troubled Asset Relief Program and advance payments of premiums to the Federal Deposit Insurance Corporation in fiscal year 2010 that would have been made in future years. Excluding those adjustments and prepayments (which were recorded as negative outlays), total spending has grown, on net, by $15 billion—or less than 1 percent—in 2011.
The relatively small increase in outlays (excluding the effects of those adjustments and prepayments) is, in part, the result of declining spending in three areas:
In contrast, net interest on the public debt increased by $14 billion (or 13 percent). Expenditures for Medicaid rose by 9 percent, and spending for Medicare and Social Security increased by 4 percent each. Defense spending increased by less than 2 percent.
Receipts have risen less than outlays—up by $66 billion (or 7 percent), compared with the amounts collected in the first half of 2010. That increase stemmed mostly from larger receipts of withheld income and social insurance taxes. Taxes withheld from paychecks increased by $47 billion (or close to 6 percent), reflecting higher wages and salaries; the increase would have been greater but for the temporary payroll tax reduction that took effect in January. In addition, nonwithheld receipts were up by $5 billion (or 5 percent), and refunds of individual income taxes were about $6 billion (or 4 percent) lower than refunds in the first half of last year. Net receipts from corporate income taxes in the first half of the fiscal year were essentially unchanged from last year.
The next several weeks will provide important information about receipts this year. Final payments for 2010 individual income tax returns are due this month, and individuals and corporations alike will make quarterly estimated payments of income taxes in April.
The Monthly Budget Review was prepared by Elizabeth Cove Delisle, Barbara Edwards, Daniel Hoople, David Rafferty, and Joshua Shakin.