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Monthly Budget Review January 2006

The Congressional Budget Office reports that the Federal deficit was about $119 billion in the first quarter of fiscal year 2006 (October through December 2005) nearly equal to the $118 billion deficit during the same period in FY 2005.

WHAT HAPPENED?

Tax revenues increased but so did spending for Hurricane Katrina. December revenues are estimated up at $27 billion the result of final tax year payments by most corporations. The remainder of the income growth came from individual withholding taxes. Receipts were $216 billion and outlays were $219 billion in December 2005 alone. Budget totals for the first quarter were Receipts at $487 billion and Outlays at $605 billion. The difference being $118 billion.

WHERE DID THE MONEY COME FROM?

(October through December 2005)

Individual income tax    $214 billion +7.7%

Corporate income tax   $64 billion   +26.3%

Social Insurance           $173 billion +4.3%

Other                           $36 billion    +8%

Total                            $487 billion  +9%

Receipts were 9% greater than the same period last year. Income and payroll taxes increased by 6 percent or $23 billion. Individual income and social insurance tax revenues usually make up the lion's share of receipts but corporate tax revenue increase by about $17 billion or 26% compared to last year at the same time.

WHERE DID THE MONEY GO?

(October through December 2005)

Defense-Military                $118 billion +6.1%

Social Security benefits      $125 billion +6.5%

Medicare                           $82 billion  +10%

Medicaid                           $45 billion  +3.2%

Other programs                 $193 billion +12.7%

Sub total                            $562 billion +8.5%

Net interest on the

Public debt                         $43 billion  +33%

Total                                  $605 billion +10.3%

The public debt stood out at a 33% increase over the same time last year. The CBO said that costs were increased by higher rates of inflation, higher short-term interest rates and growing debt. Total outlays were also impacted by $15 billion increase in flood insurance payouts. Medicare is rising only at the same rate as last year but is expected to accelerate when the fund is tapped by the prescription drug benefit beneficiaries. Medicaid in contrast only grew 3% in the first quarter of 2006.

The information in this report came from the Congressional Budget Office and has been edited for brevity. The original text was written by Mark Booth, Chad Chiroco, Barbara Edwards and Kathy Gramp of the CBO.

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