Last month, the Treasury Department reported that the federal government incurred a budget deficit of $1.1 trillion for fiscal year 2012—$207 billion less than that in 2011. Fiscal year 2012 marks the fourth consecutive year with a deficit above $1.0 trillion. As a share of the nation’s gross domestic product (GDP), the deficit declined—from 8.7 percent in 2011 to 7.0 percent in 2012—but it was still the fourth highest as a share of GDP since 1946.
As discussed in CBO’s latest Monthly Budget Review, the decline in the deficit stems largely from an increase in revenues. Revenues rose by about 6 percent in fiscal year 2012, in part because of a significant influx of corporate income tax receipts. Although the government’s receipts increased (in nominal terms) for the third consecutive year, they still were 5 percent below their peak in 2007. As a share of GDP, receipts rose from 15.4 percent in 2011 to 15.8 percent in 2012 but remained well below the 40-year average of about 18 percent of GDP.
Outlays declined by 1.7 percent in 2012. Federal spending has totaled between $3.5 trillion and $3.6 trillion in each of the past four years, and spending in 2012 was just slightly more than in 2009. As a share of GDP, outlays fell in 2012—to 22.8 percent, which was less than the 24.1 percent recorded in 2011 and 2010 but still above the 40-year average of 21.0 percent.
The Monthly Budget Review was prepared by Elizabeth Cove Delisle, Barbara Edwards, David Rafferty, Dawn Sauter Regan, and Joshua Shakin.