TheWeekInCongress.com

Monthly Budget Review August 2005

The Congressional Budget Office reports that during the first 10 months of fiscal year 2005, the deficit was about $308 billion or $88 billion less than the shortfall recorded over the same period in 2004. Revenues in this period are 14% higher than last year despite a 6% increase in spending.

The data is in flux as it normally is and things can change from month to month but the past three months have shown an improved balance sheet despite the fact that the US is in record debt. June produced a 22% surplus the result of tax payments from individuals and corporations being higher than normal. In July there was a $58 billion deficit but the amount was still less than the corresponding deficit twelve months earlier. July spending was $5 billion below the previous year, too. Receipts continue to outpace previous year takes as well.

What Happened?

2004 receipts during the first ten fiscal months was $1.535 billion and the corresponding amount for this fiscal year are 210 billion more to total $1,745 billion. Outlays for 2004, first ten months, were $1.931 billion against $2.05 billion this year for a $122 billion difference. The 2004 deficit was $396 billion and the 2005 deficit so far with two months to go is $308 billion.

WHERE DID THE MONEY COME FROM?

Receipts in July are still influenced by tax payments as are those in August. Withheld taxes totaled $69 billion. CBO notes that some changes may be the result of filing schedule changes rather than income growth. The CBO noted that depreciation incentives enacted in 2002 and 2003 are contributing to the growth of receipts in 2005. The incentives reduced taxable profits but they expire this year (unless Congress extends them)

JULY RECEIPTS

SOURCES                  2004                            2005                            CHANGE

Individual Income         $657 billion                  $752 billion                  14.5%

Corporate Income        $145 billion                  $205 billion                  41.1%

Social Insurance           $612 billion                  $664 billion                    8.6%

Other                           $121 billion                  $124 billion                    2.5%

Totals                           $1.535 trillion               $1.745 trillion               13.7%

WHERE DID THE MONEY GO?

JULY OUTLAYS

SPENDING CATEGORY                 2004                2005                Actual Change 

Defense-Military                       $364 billion                  $388 billion                  6.4%

Social Security                          $405 billion                  $427 billion                  5.6%

Medicare                                  $251 billion                  $271 billion                  8.2%

Medicaid                                  $147 billion                  $152 billion                  3.2%

Other Programs                        $626 billion                  $658 billion                  5.2%

Subtotal                                    $1.793 trillion               $1.897 trillion               5.8%

Net Interest

On the Public Debt                   $138 billion                  $156 billion                  12.9%

Total                                        $1.913 trillion               $2.053 trillion               7%

The CBO notes that the fastest growing spending category is the Interest on the Public Debt at nearly 13% in the first ten fiscal year months. The grow is due to an increase in short-term interest rates, the growing debt itself, and the rate of inflation influencing inflation-indexed bonds.

Defense spending increase is about half of the 14% increase it saw during the buildup to the Afghanistan and Iraq occupations. Spending for military personnel alone has increase over 8% this year.

Medicare continues to grow but slowly. The increases are due to more beneficiaries and a 2.7 percent cost of living increase.

The data in this report was compiled by Mark Booth, Chad Chirico, Barbara Edwards and Kathy Gramp of the Congressional Budget Office. The data was revised and reformatted by TheWeekInCongress.com. All Rights Reserved.