Monthly Budget Review for December 2013
The federal government ran a budget deficit of $182 billion for the first three months of fiscal year 2014, CBO estimates, $111 billion less than the shortfall recorded in first three months of last year.
The federal government ran a budget deficit of $182 billion for the first three months of fiscal year 2014, CBO estimates, $111 billion less than the shortfall recorded in first three months of last year. Revenues are higher and outlays are lower than they were at the same point in fiscal year 2013.
Total Receipts: Up by 8 Percent in the First Quarter of Fiscal Year 2014
Receipts for the first three months of fiscal year 2014 totaled $664 billion, $48 billion more than receipts in the same period last year.
- Individual income taxes and social insurance (payroll) taxes together rose by $38 billion, or 8 percent. Increases in amounts withheld from workers’ paychecks ($32 billion, or 7 percent) accounted for most of that gain, mainly because of the expiration of the 2-percentage-point payroll tax cut in January 2013, higher wages and salaries, and increases (beginning in January) in tax rates for income above certain thresholds. The increases would have been significantly larger if not for an acceleration in the payment of some compensation into December 2012, boosting receipts in that month, because people were anticipating higher tax rates beginning in calendar year 2013. Nonwithheld receipts, mainly from filings of 2012 tax returns by people who had received filing extensions, increased by $5 billion.
- Receipts from corporate income taxes rose by $6 billion, or 10 percent. Those receipts included most corporations’ final estimated quarterly payments for calendar year 2013.
Total Outlays: Down by 7 Percent Compared With Spending During the First Quarter of Fiscal Year 2013
Outlays for the first three months of fiscal year 2014 were $62 billion less than spending in the same period last year, CBO estimates.
Outlays declined for several major programs or categories of spending:
- Much of the drop in spending occurred because payments from the government-sponsored enterprises Fannie Mae and Freddie Mac to the Treasury were $34 billion more than they were last year, for two reasons: First, Freddie Mac made a onetime payment to the Treasury of about $24 billion because of a revaluation of certain tax assets that significantly increased its net worth. Second, because both Fannie Mae and Freddie Mac were profitable in 2013, the companies were required to make quarterly payments to the Treasury in amounts related to the increase in their net worth. (Those payments are recorded in the budget as offsetting receipts—that is, negative outlays.)
- Total spending for military activities of the Department of Defense fell by $11 billion (or 7 percent).
- Spending for Medicare declined by $3 billion (or 3 percent), mostly because a onetime intragovernmental transfer of $4 billion was made in October 2013 rather than in September 2013. Without that shift in the timing of payments, spending for Medicare would have increased by $1 billion (or 1 percent).
- Spending by the Department of Agriculture (included in “other activities”) decreased by $7 billion (or 14 percent).
- Outlays for net interest on the public debt declined by $7 billion (or 11 percent).
- Outlays for unemployment benefits declined by $4 billion (or 22 percent).
- Spending declined by smaller amounts for several other programs and activities.
Increases in spending for some other major programs during the first three months of fiscal year 2014 partially offset those declines. In particular, spending increased for two of the government’s largest entitlement programs:
- Spending for Social Security rose by $10 billion (or 5 percent); and
- Spending for Medicaid rose by $2 billion (or 3 percent).
Estimated Surplus in December 2013: $44 Billion
The federal government realized a surplus of $44 billion in December 2013, CBO estimates, a $46 billion difference from the $1 billion deficit incurred in December 2012. Because December 1 fell on a weekend in both years, certain payments that ordinarily would have been made in December were instead made in November. Without those shifts in the timing of payments (in 2012 and again in 2013), the change in the budget result from December 2012 to December 2013 would have been $42 billion rather than $46 billion.
CBO estimates that receipts in December totaled $283 billion—$13 billion (or 5 percent) more than those in the same month last year:
- Individual income and social insurance (payroll) taxes together rose by $9 billion (or 5 percent). That increase is entirely explained by a $9 billion increase in withheld taxes, reflecting the expiration of the payroll tax cut in January 2013, along with other tax increases and higher wages and salaries. The increase relative to last December would have been much larger if the payment of some compensation had not been accelerated from calendar year 2013 to December 2012 because people were anticipating higher tax rates.
- Receipts from corporate income taxes, which included the last quarterly estimated payment in calendar year 2013 for most corporations, rose by $4 billion, or 7 percent.
Total spending in December 2013 was $238 billion, CBO estimates—$32 billion less than outlays in the same month in 2012. If not for the effects of timing shifts, that difference would have been slightly smaller—$28 billion. (The month-over-month changes discussed below reflect adjustments to account for those shifts.) Among the larger changes in outlays, compared with last year, were the following:
- Payments received from Fannie Mae and Freddie Mac were $34 billion larger this December than in December 2012.
- Outlays for net interest on the public debt and the Federal Emergency Management Agency were down by $2 billion each.
- Spending for Medicare and Social Security increased by $4 billion and $3 billion, respectively.
- The government recorded offsetting receipts of $3 billion in December 2012 from the sale of stock in American International Group; no such sale occurred this December.
Outlays for other programs and activities differed by smaller amounts in both directions.
Actual Deficit in November 2013: $135 Billion
The Treasury Department reported a deficit of $135 billion for November—about $4 billion more than CBO estimated on the basis of the Daily Treasury Statements.
Note: The amounts shown in this report include the surplus or deficit in the Social Security trust funds and the net cash flow of the Postal Service, which are off-budget. Numbers may not add up to totals because of rounding.
This document was prepared by Elizabeth Delisle, Barbara Edwards, Dawn Sauter Regan, and Joshua Shakin.