from the Congressional Budget Office
The federal government’s budget deficit amounted to $528 billion for the first 11 months of fiscal year 2015, CBO estimates. That deficit was $61 billion smaller than the one recorded during the same period last year. Revenues and outlays were both higher than last year’s amounts, by 8 percent and 5 percent, respectively. Adjusted for shifts in the timing of certain payments (which otherwise would have fallen on a weekend), the deficit for the 11-month period decreased by $42 billion.
In its most recent budget projections, CBO estimated that the deficit for fiscal year 2015 (which will end on September 30, 2015) would total $426 billion, about $59 billion less than the shortfall in fiscal year 2014.
Total Receipts: Up by 8 Percent in the First 11 Months of Fiscal Year 2015
Receipts through August of this fiscal year totaled $2,884 billion, CBO estimates—$215 billion (or 8 percent) more than they did during same period last year. The largest increases in receipts were in the following categories:
Individual income taxes and payroll (social insurance) taxes together rose by $182 billion (or 8 percent). o Increases in amounts withheld from workers’ paychecks—$116 billion (or 6 percent)—accounted for the bulk of that gain. Growth in wages and salaries probably explains the increase in withheld receipts. Nonwithheld receipts rose by $72 billion (or 16 percent), reflecting payments made for both the 2014 and 2015 tax years. Most of those payments were for individual income taxes and probably reflect growth in nonwage income. Income tax refunds rose by $2 billion (or 1 percent), slightly offsetting those increases. o Receipts from unemployment insurance taxes, which are one kind of payroll tax, were down by $4 billion (or 7 percent), also slightly offsetting those increases.
Receipts from corporate income taxes rose by $22 billion (or 9 percent), probably reflecting higher taxable profits in calendar years 2014 and 2015. Receipts since April— largely representing corporations’ first two quarterly payments of estimated taxes for the 2015 tax year—increased by $7 billion (or 6 percent).
Total Outlays: Up by 5 Percent in the First 11 Months of Fiscal Year 2015
Outlays for the first 10 months of fiscal year 2015 were $198 billion higher than they were during the same period last year, CBO estimates. But the spending this year was boosted by shifts of certain payments from August to July (because August 1 fell on a weekend). If not for those shifts, outlays would have been $155 billion (or 5 percent) higher so far this year. (The discussion below reflects adjustments to account for the timing shifts.)
Outlays for the first 11 months of fiscal year 2015 were $153 billion higher than they were during the same period last year, CBO estimates. That increase would have been larger—$172 billion (but still about 5 percent)—if not for the shift of certain payments from September 2014 to August 2014. (The discussion below reflects adjustments to account for those timing shifts.) Outlays in several major categories increased:
- Payments to the Treasury from the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were lower by $54 billion. Because those payments are recorded in the budget as offsetting receipts (which are treated as reductions in outlays), that decrease in payments resulted in higher outlays. One reason that the GSEs’ payments to the Treasury were lower in the first 11 months of fiscal year 2015 than in the same span the year before is that Freddie Mac made a onetime payment of about $24 billion in December 2013 after a revaluation of certain tax assets significantly increased its net worth. In addition, financial institutions have made fewer payments to Fannie Mae and Freddie Mac in 2015 to settle allegations of fraud in connection with residential mortgages and certain other securities; as a result, the two entities’ profits are lower so far this year, so their remittances to the Treasury are lower as well.
- Outlays for Medicaid rose by $51 billion (or 19 percent), largely because of new enrollees added through the optional expansion of coverage authorized by the Affordable Care Act (ACA). In addition, the provisions of the ACA that led to the increased enrollment will be in place for all of the current fiscal year; because they took effect in January 2014, they were in place for just nine months of fiscal year 2014.
- Spending for Medicare increased by $34 billion (or 7 percent). Part of that increase reflects the fact that certain provisions of the ACA that reduced the rate of growth in Medicare spending have been implemented already. Those provisions will continue to constrain Medicare spending, but to roughly the same extent each year, so they are no longer reducing its growth rate. In addition, the increase in 2015 reflects growth in the number or cost of services furnished to Medicare beneficiaries, although data are not yet available to show how much of that growth is attributable to changes in hospital admissions, visits to physicians, prescriptions of expensive new drugs, or other health care services.
- Spending for Social Security benefits rose by $34 billion (or 4 percent).
- Outlays for the Department of Education (included in the “Other” category in the table below) increased by $23 billion (or 39 percent), mostly because the department revised upward by $18 billion the estimated net subsidy costs of student loans and loan guarantees issued in prior years—a change larger than last year’s $1 billion upward revision. If the effects of those revisions were excluded, the department’s outlays for the first 11 months of fiscal year 2015 would have increased by $5 billion (or 10 percent).
The spending increases during the first 11 months of fiscal year 2015 were partially offset by reductions in outlays for some other major components of the budget, CBO estimates, including the following:
- Payments to the Federal Communications Commission from auctions of licenses to use the electromagnetic spectrum increased by $29 billion. Compared with the 2014 auction, the 2015 auction awarded licenses for more bandwidth, which also had more desirable characteristics, thus spurring intense competition among several large telecommunications companies. Because the proceeds from spectrum auctions are recorded in the budget as offsetting receipts, that increase in payments has resulted in lower outlays. (The reduction in outlays is included in the “Other” category in the table above.)
- Outlays for unemployment benefits (also included in the “Other” category in the table above) declined by $11 billion (or 25 percent), partly because a falling unemployment rate has led fewer people to claim regular benefits and partly because the authority to pay emergency benefits expired at the end of December 2013, the end of the first quarter of fiscal year 2014.
- Spending for military activities of the Department of Defense fell by $16 billion (or 3 percent). Most of that change has resulted from a decline in outlays for overseas contingency operations, primarily in Afghanistan.
Estimated Deficit in August 2015: $62 Billion
The federal government incurred a deficit of $62 billion in August 2015, CBO estimates—$66 billion less than the deficit in August 2014. If not for the aforementioned shifts in payments from September 2014 to August 2014, as well as shifts in payments from August 2015 to July 2015, the deficit for this August would have been $4 billion less than last August’s.
CBO estimates that receipts in August totaled $211 billion—$17 billion (or 9 percent) more than the amount a year ago. Receipts from individual income taxes and payroll taxes rose by $16 billion (or 9 percent), nearly all of which came from increases in the amounts withheld from workers’ paychecks.
Total spending in August 2015 was $274 billion, CBO estimates—$49 billion less than the sum in August 2014. Adjusted for timing shifts, outlays in August were $13 billion (or 4 percent) more than they were in the same month last year. (The changes discussed below reflect adjustments to account for those shifts.) Among the larger changes in outlays were the following:
- Spending for the government’s three largest mandatory programs increased by a total of $10 billion. Medicaid spending rose by $5 billion (or 20 percent); Medicare spending, by $2 billion (or 5 percent); and Social Security spending, by $3 billion (or 4 percent).
- Outlays for the transitional reinsurance program established by the ACA amounted to $7 billion. Under that program, reinsurance payments are made to insurance plans in the individual insurance market whose enrollees incur particularly high costs for medical claims. The program is funded through a per-enrollee assessment paid by most private health insurance plans. August is the first month in which outlays have been recorded for that program.
- Outlays for net interest on the public debt increased by $2 billion (or 10 percent), mostly because upward adjustments made to the principal of inflation-protected securities to account for inflation were higher this month than in August of 2014.
- Outlays for military activities of the Department of Defense decreased by $5 billion (or 10 percent).
Actual Deficit in July 2015: $149 Billion
The Treasury Department reported a deficit of $149 billion for July—about the same as CBO estimated, on the basis of the Daily Treasury Statements, in the Monthly Budget Review for July 2015.
This document was prepared by Elizabeth Cove Delisle, Nathaniel Frentz, Dawn Sauter Regan, and Joshua Shakin.
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