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Monthly Budget Review August 2006
The Congressional Budget Office is predicting a $260 billion deficit as we approach the end of fiscal year 2006. The amount is $111 billion less than estimated in March in the President’s budget. The government isn’t necessarily spending less it is taking in more revenue. Recently the White House decided that a more accurate calculation of the deficit is to measure it in relation to the Gross Domestic Product (GDP). Going back to 2003 the percentage was 3.5%, 3.6% in 2004, 2.6% in 2005 and now 2% in 2006. 60 days from the end of the fiscal year the deficit is $239 billion, $64 billion less than at the same time last year.
WHAT HAPPENED?
Receipts were $18 billion higher in July 2006 than July 2005 mostly from withheld income taxes and July had one more Monday and one fewer Friday than last year resulting in $2 billion in withholding. Taxes paid by small corporations rose 19%.
WHERE DID THE MONEY COME FROM?
|
Source |
FY 2005 |
FY 2006 |
% Change |
|
Individual Income Taxes |
$756 billion |
$866 billion |
14.5% |
|
Corporate Income Taxes |
$206 billion |
$262 billion |
27.1% |
|
Social Insurance |
$661 billion |
$703 billion |
6.3% |
|
|
|
|
|
|
Total |
$1.746 trillion |
$1.970 trillion |
12.8% |
The CBO noted that outlays in July 2006 were $3 billion lower than the year before but would have been 8% higher because this year July 1st fell on a weekend so $18.5 billion normally spent in July was spent in June 2006. A 27% increase in corporate income taxes paid over last year’s receipts is the largest factor followed by a not so modest increase in individual taxes paid of 14.5%.
|
|
CBO Mar. 2006 |
CBO Aug. 2006 |
OMB Mid-Session |
|
Receipts |
$2.304 trillion |
$2.403 trillion |
$2.403 trillion |
|
Outlays |
$2.675 trillion |
$2.663 trillion |
$2.693 trillion |
|
Deficit |
-$371 billion |
-$260 billion |
-$290 billion |
WHERE DID THE MONEY GO?
|
Category |
FY 2005 |
FY 2006 |
Change Actual |
Change Adjust |
|
Defense |
$387 billion |
$410 billion |
6% |
6.6% |
|
Social Security Benefits |
$427 billion |
$452 billion |
5.9% |
5.9% |
|
Medicare |
$273 billion |
$312 billion |
14.2% |
15.7% |
|
Medicaid |
$152 billion |
$150 billion |
-1.2% |
-1.2% |
|
Other |
$654 Billion |
$690 billion |
5.5% |
6.5% |
|
Subtotal |
$1.893 trillion |
$2.014 trillion |
6.4% |
7.1% |
|
Interest on Debt |
$156 billion |
$194 billion |
24.3% |
24.3% |
|
Total |
$2.049 trillion |
$2.209 trillion |
7.8% |
8.4% |
The most significant factor in the lower deficit is reduction in healthcare spending in Medicare and Medicaid categories.
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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