The federal budget deficit was $283 billion for the first two months of fiscal year 2011, CBO estimates in its latest Monthly Budget Review, $14 billion less than the shortfall recorded through November of last year. Outlays and revenues alike are higher than they were last year at this time, by about 2 percent and 9 percent, respectively.
Revenues through November totaled about $269 billion, $25 billion more than in the same period last year. Because few payments of corporate or individual estimated income taxes are made in the first two months of the year, receipts in those months are typically dominated by withheld income and social insurance (payroll) taxes. Individual income and payroll taxes combined rose by $25 billion (or 10 percent). Withheld income and payroll taxes were about $17 billion (or 7 percent) higher, reflecting strengthening economic conditions. Individual tax refunds were down by about $7 billion (or 23 percent) from abnormally high amounts during October and November 2009. Receipts from corporate income taxes, net of refunds, were negative---by the same amount---for the first two months of this year and last; overall, firms received more in refunds during this period than they paid in taxes, and they will not make significant estimated payments until mid-December.
CBO estimates that spending for the first two months of fiscal year 2011 totaled $577 billion, up $11 billion from outlays in the same period last year. That net increase stems partly from higher outlays for defense, which were up $9 billion (or 8 percent). Spending for procurement and for operations and maintenance fueled most of that growth. In addition, net interest on the public debt grew by $3 billion (or 8 percent) because the amount of debt has increased as a result of the sizable increase in borrowing during fiscal year 2010.
Compared with spending in the same period last year, monthly expenditures for Social Security and Medicaid were higher by an average of $2 billion. That increase is similar to the average month-over-month increase for those programs during the final quarter of fiscal year 2010.
Net outlays for federal deposit insurance decreased by $10 billion, compared with spending in the first two months of fiscal year 2010. The decline in outlays stemmed mainly from loan repayments by corporate credit unions and increased recoveries from failed financial intuitions. Spending for unemployment assistance also fell—by $2 billion (or 9 percent)—as claims for regular benefits and average weekly benefit amounts were lower than they were a year ago.
The Monthly Budget Review presents CBO’s estimates based on the Daily Treasury Statements issued by the Treasury Department, which is scheduled to release the actual results for November on December 10. The Monthly Budget Review was prepared by Elizabeth Cove Delisle, Barbara Edwards, Daniel Hoople, and Joshua Shakin.