September 8, 2011
The federal budget deficit totaled $1.23 trillion through the first 11 months of fiscal year 2011, CBO estimates in its latest Monthly Budget Review—$28 billion less than the deficit incurred in the same period last year. Revenues were about 7.6 percent higher through August than they were at the same point last year, and outlays were 3.7 percent higher. In its most recent budget projections, published in August in The Budget and Economic Outlook: An Update, CBO estimated that the deficit for fiscal year 2011 (which will end on September 30, 2011) will total $1.28 trillion, about $10 billion less than last year’s shortfall.
Over the first 11 months of the fiscal year, revenues totaled $2.1 trillion, CBO estimates—$146 billion more than receipts during the same period last year. That growth reflects a significant increase in receipts from individual income taxes, which was partially offset by a net reduction in other receipts. Specifically:
- Withheld income and social insurance (payroll) taxes rose by $59 billion (or 4 percent). That gain would have been even larger had payroll taxes paid by employees not been reduced starting in January 2011.
- Nonwithheld income and payroll taxes rose by $48 billion (or 17 percent); the bulk of that increase resulted from higher final payments made with 2010 individual income tax returns that were filed earlier this year.
- Receipts from unemployment insurance taxes grew by $11 billion as states replenished trust funds that had been substantially depleted because of high unemployment.
- Refunds of individual income taxes were down by about $22 billion (or 9 percent).
- Receipts from corporate income taxes were about the same, as revenue increases stemming from higher profits offset revenue reductions resulting from tax legislation enacted in 2010, particularly provisions that accelerated businesses’ deductions for depreciation.
- Revenues from other sources increased by a total of about $6 billion (or 3 percent), with gains in some sources such as receipts from the Federal Reserve, and declines in other sources such as estate and gift taxes.
Outlays totaled $3.3 trillion in the first 11 months of the fiscal year, CBO estimates, $118 billion more than in the same period last year. About $46 billion of that rise stemmed from last year’s prepayments of premiums to the Federal Deposit Insurance Corporation (FDIC), which were recorded as negative outlays. Another $55 billion of the increase occurred because downward adjustments to the estimated net cost of credit programs (mainly the Troubled Asset Relief Program) have been smaller in 2011 than in 2010. Otherwise, total spending has risen only slightly.
Outlays for net interest on federal debt held by the pub¬lic grew faster than any other category of spending—by nearly 18 percent (or $37 billion)—mainly because of substantial growth in that debt over the past 11 months. Outlays for the largest entitlement programs rose more slowly: Medicare, by 4.0 percent; Social Security, by 3.5 percent; and Medicaid, by 2.1 percent. Defense spending increased by only 1.5 percent.
Those increases were partially offset by declines in two large categories of spending: Net payments to Fannie Mae and Freddie Mac were $38 billion lower than at the same point last year, and spending for unemployment benefits was $35 billion lower. Outlays for a broad category that CBO labels “Other Activities” also fell: by 1.4 percent, with last year’s prepayments of premiums to the FDIC excluded. Lower spending for deposit insurance and a variety of other programs more than offset higher spending for veterans’ programs and food and nutrition assistance.
The Monthly Budget Review is prepared by Elizabeth Cove Delisle, Barbara Edwards, Daniel Hoople, David Rafferty, and Joshua Shakin.