Washington, DC…CBO estimates that the federal government incurred a budget deficit of $642 billion for the first five months of fiscal year 2011, $10 billion less than the shortfall recorded in the same period last year. Outlays were $58 billion higher than in the previous year, while revenues were $68 billion higher.
The Treasury reported a deficit of $50 billion in January, about $3 billion less than CBO projected on the basis of the Daily Treasury Statements.
CBO estimates that the deficit in February 2011 was $223 billion, which is very similar to the deficit recorded in February 2010. Receipts in February were about $3 billion (or 2 percent) higher than receipts in February 2010, CBO estimates, marking the 10th consecutive month of year-over-year increases. Receipts of individual income and payroll taxes were $10 billion higher this February as a result of higher withheld taxes and lower refunds.
Receipts from excise taxes were also up, but corporate income tax receipts were lower. Compared with collections in February 2010, withheld
income and payroll taxes rose by about $5 billion (or 4 percent) as a result of higher wages and salaries. Those receipts rose despite the effects of the legislation enacted last December that lowered Social Security taxes paid by individuals this year. Individual income tax refunds were down by about $5 billion compared with refunds last February. The lower refunds reflect a delay in the filing and processing of some individual income tax returns that were affected by the same legislation.
Excise taxes collected in February were about $3 billion higher than the amount collected in February 2010. That increase primarily reflects the unusually low excise tax receipts last February, which resulted from the Treasury’s reallocation between corporate receipts and excise tax receipts to correct an earlier misallocation of certain refunds.
A decline of $10 billion in net corporate income tax receipts partially offset the gains in the other tax receipts. The decline stemmed largely from unusually high receipts in February 2010 (in part because of the reallocation from excise taxes). In addition, some of the decline may have resulted from legislation enacted last year that allowed more rapid depreciation of investment in equipment. In CBO’s estimation, neither of those factors indicates that corporate profits are weakening.
Outlays were $5 billion (or about 1 percent) higher than in February 2010. Net interest on the federal debt was about $4 billion higher than it was a year ago, primarily because of greater federal borrowing during the past year. Outlays were also higher in February 2011 than they were in February 2010 for Medicare (up by $4 billion), the National Credit Union Administration ($3 billion), Social Security ($2 billion), and Veterans Affairs ($2 billion). Those increases were partially offset by lower spending for unemployment compensation and certain other mandatory programs.
Notably, outlays for the Small Business Administration were $5 billion lower than they were in February 2010, when adjustments to the estimated subsidy costs of loans and loan guarantees increased outlays by nearly $5 billion. CBO expects an adjustment of similar magnitude to occur in March 2011.
CBO estimates that the Treasury will record a deficit of $642 billion through February, 1.5 percent less than the deficit during the same period last year.