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TheWeekInCongress.com

The Monthly Budget Review

April 2007

The Federal government recorded a deficit of $257 billion for the first six months of fiscal year 2007 beginning October 1, 2006.. The debt is $6 billion less than during the same time last fiscal year.

WHAT HAPPENED?

There was a $120 billion deficit for the month of February 2007 which is about $3 billion less than predicted due to lower than expected spending. March’s deficit was $95 billion or about $10 billion more than the same period last year. March receipts were nearly the same as last year and outlays were up $11 billion. Withholding for income taxes gained over $5 billion (3.5%). Corporate revenues rose almost $5 billion or 13%.

TOTALS THROUGH MARCH

	FY 2006	FY 2007 Prelim	Est. Change
Receipts	$1.038 trillion	$1.121 trillion	+$83 billion
Outlays	$1.341 trillion	$1.378 trillion	+$37 billion
Deficit	$303 billion	$257 billion	$46 billion

WHERE THE MONEY CAME FROM

RECEIPTS THROUGH MARCH

Source	FY 2006	FY 2007 Prelim.	Percent Change
Individual Income	$433 billion	$482 billion	11.4%
Corporate Income	$130 billion	$154 billion	18.5%
Social Insurance	$394 billion	$409 billion	3.9%
Other	$81 billion	$75 billion	-7.3%
Total	$1.083 trillion	$1.121 trillion	8%

In the first half of the fiscal year receipts rose by 8% compared to the prior year. 80% or about $65 billion came from higher net receipts of individual income and payroll taxes and about $58 billion came from higher withheld taxes on compensation paid employees. $17 billion came from higher collections of non-withheld income and payroll taxes (estimated taxes). The increases tend to be from non-wage income. Such tax revenues are usually highest in April and May as quarterly estimates are riled then.

Some gains were offset by $10 billion more in individual tax refunds. Net corporate taxes rose by $24 billion or 18.5%

WHERE THE MONEY WENT

OUTLAYS THROUGH MARCH

Category	FY 2006	FY 2007 Prelim.	Actual %	Adjusted %
Defense	$251 billion	$268 billion	7%	7%
Social Security	$268 billion	$283 billion	5.7%	5.9%
Medicare	$187 billion	$224 billion	20.2%	14.2%
Medicaid	$90 billion	$94 billion	5.2%	5.2%
Other Programs	$435 billion	$392 billion	-9.8%	-9.7%
Subtotal	$1.230 trillion	$1.262 trillion	2.6%	1.8%
Net Interest on Debt	$111 billion	$116 billion	4.4%	4.4%
Total	$1.341 trillion	$1.378 trillion	2.8%	2.0%

Outlays for march were 2% higher than last year way below the average growth of 7% over the past five years. That was the result of ‘Other’ spending dropping by 10% or $42 billion compared to the same time last year. The reduction is predominantly from lower payouts for flood insurance, disaster relief and agriculture programs this year compared to last. Receipts also came in from more Medicare premiums and licensing the nation’s airwaves bringing in about $30 billion.

March outlays dropped by about 8% although total Medicare spending rose 11% through March. The increase in Medicare is due to the President’s prescription drug program that is paying out to the tune of $4.1 billion a month so far when last year the program did not take affect until the second quarter of FY 2006. Medicaid/s flat growth is due to shifting prescription drug payouts from Medicaid to Medicare and increasing the number of Americans covered.

Defense spending is up due largely to double digit growth in procurements and research and development as well as personnel increases.

This Report is revised from the original CBO report compiled by CBO’s Mark Booth, Chad Chirico, Barbara Edwards, and Kathy Gramp.

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