The federal government accumulated a budget deficit of $349 billion for the first four months of fiscal year 2012, CBO estimates in its latest Monthly Budget Review, $70 billion less than the shortfall recorded for the same period last year. Without shifts in the timing of certain payments, however, the deficit would have been only $39 billion smaller than the shortfall for the same period last year.
If lawmakers enact no further legislation affecting spending or revenues, the federal government will end fiscal year 2012 with a deficit of nearly $1.1 trillion, CBO estimates, compared with $1.3 trillion in 2011. However, enactment of proposals such as pending legislation to extend the payroll tax cut could have a significant impact on the deficit for 2012. (For more details about CBO's most recent budget projections, see The Budget and Economic Outlook: Fiscal Years 2012 to 2022.)
Receipts Increased by 4 Percent As Corporate Tax Receipts Return to Pre-Recession Levels
Receipts totaled $791 billion in the first four months of fiscal year 2012, 4 percent more than in the same period last year, CBO estimates. Virtually all of the $33 billion increase resulted from the following:
- Corporate income tax receipts grew by $20 billion (or 52 percent) because tax payments were $6 billion higher than in the first four months of 2011 and refunds were $14 billion lower. The large drop in corporate tax refunds reflects a return to a level more in keeping with that seen before the recession. (Such refunds were unusually high in the first quarter of fiscal year 2011.)
- Receipts from individual income taxes rose by $13 billion (or 3 percent) through January, compared with receipts in the same period a year earlier. Nonwithheld receipts grew by $6 billion (or 8 percent), suggesting continued increases in nonwage income, while refunds declined by $4 billion. Those receipts were further boosted by higher withheld individual income taxes.
In contrast, receipts from payroll taxes were slightly lower over the October-January period this year, reflecting the reduction in the employees' share of the Social Security payroll tax that took effect in January 2011. A $4 billion decline in withheld payroll taxes was roughly offset by a $4 billion increase in unemployment taxes.
Outlays About the Same When Adjusted for Timing Shifts
Spending totaled $1.14 trillion, about $37 billion (or 3 percent) lower in the first four months of this year than in the same period last year; but adjusted for shifts in the timing of certain payments, total outlays were about the same in both periods.
Outlays declined for some categories of spending:
- Outlays for Medicaid fell by $18 billion (or 18 percent) because legislated increases in the federal government’s share of Medicaid costs expired in July 2011.
- Spending for unemployment benefits fell by $10 billion (or 23 percent) because fewer claims were filed.
- Adjusted for payment shifts, defense spending declined by $9 billion (or about 4 percent).
- Education spending dropped by $13 billion (or 43 percent), largely because of a decline in spending from funding provided in the American Recovery and Reinvestment Act of 2009.
For some categories, spending was greater than that in the first third of fiscal year 2012:
- Net payments to the government-sponsored enterprises Fannie Mae and Freddie Mac increased by $11 billion.
- Adjusted for timing shifts, outlays for Social Security benefits and Medicare also were higher, by $10 billion (or 4 percent) and $6 billion (or 4 percent), respectively.
- Spending for net interest on publicly held debt rose by $3 billion (or 3 percent).
- Net outlays to stabilize corporate credit unions rose by $13 billion, mostly because outlays in 2011 were reduced by loan repayments from credit unions.
- Spending for the Department of Homeland Security increased by $3 billion (or 22 percent).
The Monthly Budget Review presents CBO's estimates based on the Daily Treasury Statements issued by the Treasury Department. It was prepared by Elizabeth Cove Delisle, Barbara Edwards, Daniel Hoople, David Rafferty, and Joshua Shakin.