The federal budget deficit was $320 billion for the first quarter of fiscal year 2012, CBO estimates in its latest Monthly Budget Review, $49 billion less than the deficit recorded in the same period in fiscal year 2011. But $26 billion of that difference resulted from shifts in the timing of certain payments because the regular payment dates fell on weekends or holidays; otherwise, the deficit would have declined by only $23 billion. Later this month, CBO will issue new budget projections—spanning the period from 2012 through 2022—in its annual Budget and Economic Outlook.
Receipts in the first quarter of fiscal year 2012 totaled $554 billion, an increase of $23 billion. Most of the gains stemmed from higher corporate income taxes, which rose by $18 billion, or 51 percent.
That increase occurred because tax payments rose by $6 billion and refunds fell by $13 billion. Corporate refunds were unusually high in the first quarter of fiscal year 2011 in the aftermath of the recession; this year the amount is more comparable with those of the years before the recession.
Altogether, individual income and payroll tax receipts rose by $4 billion, or about 1 percent. Several factors contributed to that increase: Refunds of individual income taxes declined by $5 billion; nonwithheld receipts of individual income and payroll taxes rose by $3 billion; and receipts from unemployment taxes increased by $2 billion, as states replenished trust funds that had been depleted during the recession. Much of the gain was offset by a $6 billion (or 1 percent) drop in withholding of individual income and payroll taxes, primarily because the payroll tax rate in effect during the first quarter of fiscal year 2012 was lower than that in the same period a year earlier.
Receipts from estate and gift taxes rose by $2 billion, and collections from excise taxes increased by $1 billion, but receipts from the Federal Reserve declined by $3 billion, as its portfolio has shifted to lower-yielding, less-risky assets.
Spending for some programs and activities was lower in the first quarter of this fiscal year than in the same period last year. Outlays for Medicaid fell by $15 billion, or 20 percent, because, by law, the federal government’s share of the program’s costs dropped in July 2011. Adjusted for the shift in the timing of military paychecks, defense spending was $10 billion, or 5 percent, lower than in the same period a year before. In addition, spending for unemployment benefits fell by $9 billion or 26 percent because fewer claims were filed.
Those decreases were partially offset by increases in other programs. Net payments to the government-sponsored enterprises Fannie Mae and Freddie Mac increased by $11 billion. Spending for net interest on the public debt increased by $4 billion, or 6 percent, in the first quarter of fiscal year 2012. Adjusted for timing shifts, outlays for Social Security benefits and Medicare also were higher than in the first quarter of 2011, by $6 billion and $1 billion, respectively.
Expenditures for “Other Activities,” adjusted for timing shifts, were $12 billion, or 5 percent, higher than in the first quarter of fiscal year 2011. Net outlays for stabilizing corporate credit unions rose by $12 billion, mostly because outlays in fiscal year 2011 were reduced by loan repayments from credit unions. In contrast, education spending dropped by $6 billion (or 26 percent) as spending from the 2009 economic stimulus act waned.
The Monthly Budget Review was prepared by Elizabeth Cove Delisle, Barbara Edwards, Daniel Hoople, David Rafferty, and Joshua Shakin.