The federal government’s fiscal year 2012 has come to a close, and CBO estimates, in the Monthly Budget Review, that the federal budget deficit for the year was about $1.1 trillion, approximately $200 billion lower than the shortfall recorded in 2011. The 2012 deficit was equal to 7.0 percent of gross domestic product, CBO estimates, down from 8.7 percent in 2011, 9.0 percent in 2010, and 10.1 percent in 2009, but greater than in any other year since 1947. CBO’s deficit estimate is based on data from the Daily Treasury Statements; the Treasury Department will report the actual deficit for fiscal year 2012 later this month.
The estimated deficit is $38 billion below what CBO projected in its August Budget and Economic Outlook because revenues were higher and outlays were lower than expected near the end of the fiscal year.
Total Receipts Were Up by 6 Percent in Fiscal Year 2012
Receipts in fiscal year 2012 totaled $2.5 trillion, $148 billion more than those in the same period last year. Compared with collections in fiscal year 2011:
- Net receipts from corporate income taxes grew by $61 billion (or 34 percent), largely because of changes in tax rules in recent years.
- Individual income tax receipts grew by $37 billion (or 3 percent), as wages and salaries grew modestly, pushing up withheld tax payments; nonwitheld tax payments rose as well.
- Receipts from social insurance taxes rose by $32 billion (or 4 percent), reflecting greater withholding for payroll taxes and an increase in unemployment insurance taxes as states continued to replenish trust funds that were depleted by the recession.
- Receipts from other sources increased, on net, by about $18 billion (or 9 percent).
Outlays Were Down by 1.6 Percent in Fiscal Year 2012
Outlays in fiscal year 2012 totaled $3.5 trillion, $59 billion (or 1.6 percent) less than spending in the same period last year. Excluding adjustments recorded in the budget for the estimated cost of credit programs (mainly the Troubled Asset Relief Program), however, the government’s outlays decreased by 2 percent relative to spending in 2011.
By CBO’s estimates, outlays decreased for several major categories of spending:
- Medicaid—Outlays fell by $24 billion (or 9 percent) because legislated increases in the federal share of the program’s costs expired in July 2011.
- Unemployment benefits—Spending dropped by $30 billion (or 24 percent), mostly because fewer people have been receiving benefits in recent months.
- Defense—Outlays fell by $19 billion (or 3 percent), after adjusting for timing shifts, in part because of lower spending for military operations in Afghanistan and Iraq.
- Education programs—Net outlays were lower by $29 billion (or 30 percent), excluding changes recorded in the budget for the estimated cost of student loans. That decline has occurred largely because of waning spending from funding provided by the American Recovery and Reinvestment Act. (Most of that spending occurred before 2012.)
For some major programs, spending increased:
- Social Security payments increased by $42 billion (or 6 percent).
- Medicare’s net spending was up by $15 billion (or 3 percent) after adjusting for timing shifts.