–Sees Deficit So Far In FY’2012 At -$237 Bln Vs -$291 Bln Last Year
WASHINGTON (MNI) – The following is a summary of the U.S.
Congressional Budget Office’s December Budget Review published Wednesday
with it’s estimate for last month’s deficit. The U.S. Treasury
Department is scheduled to release its monthly statement December 12:
The federal budget deficit was close to $240 billion for the first
two months of fiscal year 2012, more than $50 billion below the deficit
recorded through November of last year, CBO estimates. Much of that
difference occurred because roughly $30 billion in payments that would
ordinarily have been made on October 1, 2011 (that is, in fiscal year
2012), were made instead in September (that is, in fiscal year 2011)
because October 1 fell on a weekend. Without those shifts in the timing
of payments, the decline in the deficit for the two-month period would
have been about $20 billion.
—
The deficit in November was $139 billion, CBO estimates, $12
billion less than it was in the same month last year.
According to CBOs estimates, receipts in November 2011 totaled
$153 billion — $4 billion (or 3 percent) higher than receipts in
November 2010. Net receipts from corporate income taxes increased by $5
billion, primarily because of lower corporate refunds. Refunds of
individual income taxes were also lower, boosting net revenues by $3
billion. A decline of $5 billion (or 4 percent) in withheld income and
payroll taxes offset some of those gains.
Outlays were $8 billion lower in November than during the same
month last year, CBO estimates. Spending declined for Medicaid (by $4
billion), unemployment benefits (by $3 billion), and defense (by $5
billion, mostly in spending for procurement). In contrast, outlays for
Medicare, Social Security, and net interest on the public debt each
increased by $2 billion.
The Treasury will record a deficit of $237 billion for the first
two months of fiscal year 2012, CBO estimates $54 billion less than the
shortfall that was recorded in the same period last year. Revenues
increased by $21 billion (or 7 percent), and outlays fell by $33 billion
(or 6 percent).
The $21 billion gain in revenues (compared with receipts in October
and November last year) stemmed from an increase in net receipts from
corporate and individual income taxes, which was partly offset by a
decline in receipts from social insurance (payroll) taxes. Corporate
receipts rose by $11 billion because tax payments were $2 billion higher
and refunds were $9 billion lower than in the same months last year.
Receipts of individual income and social insurance taxes, other
than those from withholding, rose by $8 billion because nonwithheld
payments of those taxes increased by $3 billion and refunds of
individual income taxes fell by $4 billion.
Withheld income and payroll taxes rose slightly (by $1 billion).
That outcome was influenced by two changes in the tax system: A 2
percentage-point reduction in the payroll tax rate took effect in 2011,
after the expiration at the end of December 2010 of the smaller Making
Work Pay tax credit, which had been reducing income tax withholding. The
net effect of those changes has been to lower growth in withholding this
year. If not for those changes, withheld income and payroll taxes would
have increased by roughly $10 billion, or about 4 percent, CBO
estimates.
Unemployment taxes were also $1 billion higher because states have
continued their efforts to replenish their unemployment trust funds,
which were depleted during the recent recession and its aftermath.
Estate and gift taxes rose by $2 billion; that growth was caused, in
part, by reinstatement of the estate tax in 2011. In contrast, receipts
from the Federal Reserve dropped by $2 billion, largely because of a
shift in its portfolio from higher-yielding, higher-risk investments to
Treasury securities, which earn lower rates of interest.
Spending for the first two months of fiscal year 2012 was about $33
billion less than it was during the same period last year. That decline
is almost entirely attributable to a shift of certain payments from
October to September because October 1 fell on a weekend. Otherwise,
outlays would have been virtually unchanged.
Adjusted for the payment shift, outlays for defense were $9 billion
(or 7 percent) lower than in the same period last year. Spending for
unemployment benefits also declinedby $6 billion (or 26
percent)because fewer claims were filed and, to a lesser extent,
because a provision that boosted recipients benefits by $25 per week
expired. Spending for education programs fell by $4 billion (or 27
percent)in part because the American Recovery and Reinvestment Act
boosted education outlays in October and November 2010.
Adjusted for the payment shift (which affected Medicare), total
expenditures for the three largest entitlement programs were about the
same as they were in the same period last year. Outlays for Social
Security benefits and Medicare rose by $4 billion each (or 3 percent and
5 percent, respectively). In contrast, spending for Medicaid fell by $8
billion (or 16 percent).
Expenditures in the broad category “Other Activities,” adjusted for
the payment shift, increased by $8 billion (or 5 percent) compared with
such spending in the first two months of fiscal year 2011. Spending
increased for the Departments of Homeland Security and Agriculture, for
veterans benefits, and for a number of other programs. Outlays for net
interest on the public debt were $5 billion (or 12 percent) higher,
reflecting the growing federal debt.
** Market News International Washington Bureau: 202-371-2121 **
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