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Halfway There: A Mid-Year Budgetary Review
April 7, 2013
Six months into Fiscal Year 2013 (which began on October 1, 2012), the Congressional Budget Office (CBO) released its "Monthly Budget Review" on Friday with some comparisons showing how the United States' fiscal situation looked at this point last year.
Through March, CBO projected a 6-month deficit nearly $178 billion less than was recorded at the same point last year. The projection is largely due to an increase in tax revenues -- total outlays are only projected to be $46 billion less than in 2012, but revenues were $132 billion higher. Individual income tax receipts jumped 14.7%, while a combination of tax hikes on some income brackets, and the expiration of the payroll tax cut in January lead to an $85 billion increase in tax receipts withheld from workers' paychecks.
Federal outlays were about 2.5 percent lower over the first half of Fiscal Year 2013 compared to the first half of Fiscal Year 2012. At $315 billion, defense and military spending saw about a 6 percent decrease compared to the $335 billion the government had spent at the halfway point last year. Within the broad "Other Activities" category, relief efforts in the wake of natural disasters such as Hurricane Sandy and severe drought conditions lead to an increase in outlays at the Federal Emergency Management Agency and Department of Agriculture, respectively. These were offset by a decrease in payments to Fannie Mae & Freddie Mac, and a decrease in TARP funding.
Overall, spending decreased slightly in some areas. However, major entitlement programs such as Social Security, Medicaid, and Medicare all saw growth in payments of at least 5 percent. Increased tax revenues still seem to be driving any modest deficit reduction seen so far.
As the April 15 individual income tax filing deadline nears, the IRS reported a decrease in the number of tax returns it had received compared to this point last year.
Interestingly, nonwithheld receipts of individual income taxes were $14 billion higher than at the same point last year. CBO attributed that increase to taxpayers shifting income they otherwise would have received in 2013 to late 2012 instead, in order to avoid paying higher tax rates effective at the start of the new calendar year.
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