In its latest Monthly Budget Review, CBO estimates that the federal government incurred a budget deficit of $642 billion for the first five months of fiscal year 2011, $10 billion less than the shortfall recorded in the same period last year.
The government’s receipts have been growing on a year-over-year basis. Receipts in February were higher than the amounts collected in February 2010, CBO estimates, marking the 10th consecutive month of year-over-year increases. Prior to that period, in 22 of the previous 24 months, receipts had been lower than those in the same month the year before.
In total, receipts for the first five months of fiscal year 2011 were $68 billion, or 8.5 percent, higher than receipts for the comparable period last year, CBO estimates, largely as a result of increases in individual income taxes. Withholding for income and payroll taxes increased by $50 billion (or 7 percent), which reflects higher wages and salaries; the increase would have been greater but for the temporary payroll tax reduction that took effect in January 2011. Refunds of individual income taxes were about $14 billion lower than refunds in the first five months of last year; half of that decline occurred in January and February, probably because of a delay in the filing and processing of some individual tax returns that were affected by the tax legislation that was enacted in December.
Spending for the first five months of fiscal year 2011 was $58 billion, or 4.0 percent, higher than outlays in the same period last year, CBO estimates. Much of that growth is explained by advance payments made by depository institutions to the Federal Deposit Insurance Corporation in fiscal year 2010. Excluding those prepayments to the government (which were recorded as negative outlays), total spending has grown by less than 1.0 percent in 2011, CBO estimates.
Some of the slow growth can be attributed to lower net spending—a decline totaling $18 billion—for payments to Fannie Mae and Freddie Mac and for the Troubled Asset Relief Program. Additionally, outlays for unemployment benefits decreased by $14 billion (or 20 percent) because of fewer claims and lower average benefits.
In contrast, net interest on the public debt rose by $11 billion (or 13 percent) as a result of substantial growth in the national debt over the past year. Outlays for Medicaid increased by $7 billion (or 6 percent). Spending for Social Security and defense grew by 4 percent and 3 percent, respectively. Medicare spending was up by only 3 percent, an unusually low rate of growth.
The Monthly Budget Review was prepared by Barbara Edwards, Daniel Hoople, David Rafferty, and Joshua Shakin.