WASHINGTON (MNI) – The following are excerpts of the U.S.
Congressional Budget Office’s Monthly Budget Review:

The federal budget deficit was $320 billion in the first quarter of
fiscal year 2012, CBO estimates, $49 billion less than the deficit
recorded in the same period in fiscal year 2011. But $26 billion of that
difference resulted from shifts in the timing of certain payments
because the regular payment dates fell on weekends or holidays;
otherwise, the deficit would have declined by only $23 billion. Receipts
were up by 4 percent, compared with those in the same period a year
before. Adjusted for timing shifts, outlays were essentially unchanged.
Later this month, CBO will issue new budget projections spanning the
period from 2012 through 2022.

The deficit in December 2011 was $84 billion, CBO estimates, $6
billion more than the deficit a year earlier. Without shifts in the
timing of certain payments, the deficit in December 2011 would have been
just $1 billion more than it was in December 2010.

CBO estimates that receipts in December 2011 were $2 billion (or 1
percent) higher than those a year earlier. Net receipts of corporate
income taxes rose by $7 billion (or 16 percent), primarily because
quarterly estimated payments in December 2011 were higher than those a
year before, which were unusually weak because of changes in
depreciation rules enacted late that year. Receipts from nonwithheld
individual income and payroll taxes and unemployment insurance taxes
increased by a total of $2 billion.

Those gains were largely offset by a drop of $7 billion (or 4
percent) in withholding for individual income and payroll taxes. That
decline occurred because the payroll tax rate was reduced in 2011 and
because December 2011 had one fewer working day than December 2010.

Outlays in December 2011 were $8 billion greater than those in
December 2010, CBO estimates. The shifting of payments because of
weekends and holidays affected spending in both years, but it boosted
outlays by $5 billion more in December 2011 than in December 2010.
Without those timing shifts, outlays in December 2011 would have been $3
billion higher than they were in December 2010.

Net payments to Fannie Mae and Freddie Mac climbed by $11 billion
because the housing agencies required significantly larger cash
infusions from the federal government than they did in December 2010.
Spending increased by smaller amounts in several other areas. In
contrast, Medicaid outlays were $7 billion less than those in December
2010, when the federal government was temporarily reimbursing states at
a higher matching rate. Unemployment insurance payments fell by $3
billion.

CBO estimates that the Treasury will record a deficit of $320
billion for the first quarter of fiscal year 2012, $49 billion less than
the deficit in the first quarter of 2011. Revenues were $23 billion
higher and outlays were $26 billion lower than the amounts recorded in
the first quarter of fiscal year 2011

Receipts in the first quarter of fiscal year 2012 were about 4
percent more than those a year earlier. Most of the gains stemmed from
higher corporate income taxes (which rose by $18 billion, or 51
percent). Receipts from individual income taxes also increasedby $15
billion (or 6 percent). Offsetting the gains were lower social insurance
(payroll) tax receipts, which declined by $11 billion (or 6 percent)
because the payroll tax rate was reduced in 2011.

The increase in corporate income tax receipts occurred because tax
payments rose by $6 billion and refunds fell by $13 billion. Corporate
refunds were unusually high in the first quarter of fiscal year 2011 in
the aftermath of the recession; this year the amount is more comparable
with those of the years before the recession.

Altogether, individual income and payroll tax receipts rose by $4
billion, or about 1 percent. Several factors contributed to that
increase: Refunds of individual income taxes declined by $5 billion;
nonwithheld receipts of individual income and payroll taxes rose by $3
billion; and receipts from unemployment taxes increased by $2 billion,
as states replenished trust funds that had been depleted during the
recession. Much of the gain was offset by a $6 billion (or 1 percent)
drop in withholding of individual income and payroll taxes, primarily
because the payroll tax rate in effect during the first quarter of
fiscal year 2012 was lower than that in the same period a year earlier.

Receipts from estate and gift taxes rose by $2 billion, and
collections from excise taxes increased by $1 billion, but receipts from
the Federal Reserve declined by $3 billion, as its portfolio has shifted
to lower-yielding, less-risky assets.

Without shifts in the timing of certain government payments,
first-quarter outlays would have been about the same as those in the
same period a year before. Outlays for Medicaid fell by $15 billion (or
20 percent) because, by law, the federal governments share of the
programs costs dropped in July 2011. Adjusted for the shift in the
timing of military paychecks, defense spending was $10 billion (or 5
percent) lower than in the same period a year before. In addition,
spending for unemployment benefits fell by $9 billion (or 26 percent)
because fewer claims were filed.

Those decreases were partially offset by an $11 billion increase in
net payments to the government-sponsored enterprises Fannie Mae and
Freddie Mac. Spending for net interest on the public debt increased by
$4 billion (or 6 percent) in the first quarter of fiscal year 2012.
Adjusted for timing shifts, outlays for Social Security benefits and
Medicare also were higher than in the first quarter of 2011, by $6
billion (or 3 percent) and $1 billion (or 1 percent), respectively.

Expenditures for Other Activities, adjusted for timing shifts,
were $12 billion (or 5 percent) higher than in the first quarter of
fiscal year 2011. Net outlays for stabilizing corporate credit unions
rose by $12 billion, mostly because outlays in fiscal year 2011 were
reduced by loan repayments from credit unions. In contrast, education
spending dropped by $6 billion (or 26 percent) as spending from the 2009
economic stimulus act waned.

** Market News International Washington Bureau: 202-371-2121 **

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