MBRFEBO6

TheWeekInCongress.com

Monthly Budget Review March 6, 2006

The fiscal year 2006 began October 1, 2005 and in the five months through February 2006 the US government incurred a deficit of $219 billion. The amount is $5 billion less than the same period last year.

The amount is also $152 billion less than the $371 billion the CBO predicts will be the deficit total for 2006 if the President's budget is enacted. The $371 billion is calculated to be 2.8 percent of the gross domestic product as contrasted to the $318 billion deficit in 2005 that was 2.6 percent of the GDP.

WHAT HAPPENED?

Receipts in January 2006 were $230 billion and outlays were only $209 billion leaving a $21 billion surplus. But in February 2006 receipts dropped to $111 billion against outlays of $232 billion leaving behind a deficit of $121 billion.

February receipts reflected a $9 billion increase in withholding for income and social security taxes and corporate receipts rose $3 billion but $2 billion was from late filings due to Hurricane Katrina. Outlays for February rose $17 billion over the same month in 2005. CBO concludes spending for the new Medicare Prescription Drug program and hurricane relief added to outlays this year.

Figures for the end of February show receipts of $871 billion or $81 billion over 2005 and outlays of $1.09 trillion or $77 billion over 2005 adding up to a deficit of $219 billion.

WHERE DID THE MONEY COME FROM?

February 2005 and 2006 Receipts:

Individual income taxes:	2005 $355 billion	2006 $391 billion.	+10.3%
Corporate income taxes:	2005 $73 billion	2006 $95 billion.	+30%
Social Insurance:	2005 $304 billion	/2006 $322 billion.	+6%
Other:	2005 $59 billion	2006 $64 billion.	+8%
Total:	2005 $790 billion	2006 $871 billion.	+10.3%

WHERE DID THE MONEY GO?

February 2005 and 2006 Outlays:

Defense-Military	2005--$188 billion	2006--$202 billion	+7.5%
Social Security	2005--$210 billion	2006--$223 billion	+5.9%
Medicare	2005--$130 billion	2006--$144 billion	+13.7%
Medicaid	2005--$73 billion	2006--$74 billion	+1.7%
Other Programs	2005--$341 billion	2006--$356 billion	+4.6%
Subtotal	2005--$942 billion	2006--$998 billion	+7.4%
Net interest on debt	2005--$72 billion	2006--$92 billion	+27.7%
Total	2005-$1.014 trillion	2006-$1.090 trillion	+8.9%

The outlays for net interest were so high because of higher short-term interest rates, increases in inflation-indexed bonds and growth in the amount of the federal debt, CBO concluded. A $3 billion payment to the Pension Benefit Guaranty Corporation also raised the interest debt.

ESTIMATES FOR THE ENTIRE YEAR OF 2006

The estimates for FY 2006 from the CBO and the White House Office of Management and Budget are as follows:

Receipts	CBO--$2.304 trillion	OMB--$2.285 trillion
Outlays	CBO--$2.675 trillion	OMB--$2.709 trillion
Deficit	CBO--$371 billion	OMB $423 billion

CBO data differs from OMB because CBO predicts less spending for defense, Medicare (the prescription drug program), unemployment benefits, Medicaid and student loans.

The above information was reformatted from a CBO report prepared by Mark Booth, Chad Chirico, Barbara Edwards and Kathy Gramp of the Congressional Budget Office.