CBO Monthly Budget Review
The fiscal deficit was approximately $240 billion for the first two months of fiscal year 2012, according to CBO estimates. Roughly $30 billion of payments that would have occurred in October (fiscal year 2012) were made at the end of September (fiscal year 2011) because October 1 fell on a weekend. If the shift in the timing of the payments didn't occur, the decline in the deficit for the two-month period would have been an estimated $20 billion instead of the reported $50 billion.
Treasury reported a deficit of $98 billion for October, about $4 billion more than CBO's estimate. The difference was largely due to spending for programs of the Department of Agriculture and Treasury coming in higher than estimated. The estimated deficit for November was $139 billion, $12 billion less than it was in November of fiscal year 2011.
CBO estimates that receipts in November totaled $153 bilion, or 3 percent higher than receipts in November 2010. Net receipts from corporate and individual income taxes increased by $8 billion, because of lower refunds. A decline of $5 billion in withheld income and payroll taxes offset some of those gains.
Outlays were $8 billion lower in November. Outlays declined for Medicaid (by $4 billion), unemployment benefits (by $3 billion), and defense (by $5 billion). Outlays increased for Medicare, Social Security, and net interest on public debt each increased by $2 billion.
The decline in the deficit of $54 billion for the first two months of fiscal year 2012 are attributed to an increase in revenue of $21 billion and decline in outlays of $33 billion.
Revenue gained $21 billion compared with October and November of last year. Net receipts from corporate and individual income taxes increased and was partly offset by a decrease in receipts from social insurance (payroll) taxes.
Spending for the first two months of fiscal year 2012 was roughly $33 billion less than it was during the same period last year. The decline is mostly attributed to a shift in the timing of payments. Otherwise, outlays was close to unchanged.
The impact of deficits and growing debt would be higher interest rates, less domestic investment, less national savings and lower income growth. Other effects would be, the restricted ability to respond to economic downturns and financial crises.
Federal Budget Balance
The federal budget balance came in at negative 137.1 billion today, which is slightly better than forecast and greater than the previous month. The report is a long-term positive for interest rates or negative for bonds. We'll see what the CBO says about the deficit in the next monthly budget review.
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