Monthly Budget Review for December 2012

The federal budget deficit was $293 billion for the first three months of fiscal year 2013 (that is, October through December 2012), $29 billion less than the shortfall recorded in the first quarter of last fiscal year, CBO estimates. Without shifts in the timing of certain payments in both years, however, the deficit for the three-month period would have been about $60 billion lower this year than in fiscal year 2012.

Total Receipts Were Up by 11 Percent in the First Quarter of Fiscal Year 2013

Receipts for the first three months of fiscal year 2013 totaled $616 billion, $60 billion more than those in the same period last year. Compared with receipts in the first quarter of last year:

• Individual income and payroll (social insurance) taxes together rose by $44 billion, or 10 percent—accounting for most of the first quarter’s gain in revenues. Taxes withheld from workers’ paychecks rose by $45 billion (or 10 percent) and nonwithheld receipts rose by $2 billion (or 8 percent). Those increases were offset by a $3 billion decline in receipts from unemployment taxes.
• Net corporate income taxes increased by $7 billion (or 13 percent); payments rose by $6 billion and refunds fell by $1 billion.
• Other revenues rose by $10 billion. Receipts from the Federal Reserve rose by about $6 billion, mostly because receipts in the last quarter of calendar year 2011 were unusually low compared with those both before and since. In addition, excise tax receipts rose by $2 billion (or 12 percent) and customs duties rose by $1 billion (or 11 percent).

Spending Was About the Same When Adjusted for Timing Shifts

By CBO’s estimate, federal outlays—totaling $909 billion—would have been about the same in the first quarter of 2013 as they were during that period in 2012, if not for shifts that occurred in the timing of certain payments because the scheduled payment dates fell on a weekend or holiday. (The year-over-year changes discussed below reflect adjustments to account for those shifts.)

For some major programs and activities, spending increased:

• Social Security, Medicare, and Medicaid—Expenditures for each of the three largest entitlement programs were greater than in the same period last year. Outlays for Social Security benefits increased the most—by $12 billion (or 7 percent). Spending for Medicare rose by $6 billion (or 5 percent) and outlays for Medicaid rose by $5 billion (or 8 percent).
• Net interest—Outlays for net interest on the public debt were $5 billion (or 7 percent) greater, reflecting both the growing debt held by the public and larger payments for inflation-indexed securities.
• Fannie Mae and Freddie Mac—Net payments to the government-sponsored enterprises were $14 billion less than those made at the same time last year.

In contrast, outlays decreased for some major categories of spending:

• Unemployment benefits—Spending declined by $6 billion (or 23 percent), mostly because fewer people have been receiving benefits in recent months.
• Defense—Outlays were $9 billion (or 5 percent) less than in the same period last year.