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Week Ending July 14, 2006

The deficit since October 2005, the beginning of this current fiscal year, totals about $208 billion or $41 billion less than the same period in the prior fiscal year.

WHAT HAPPENED?

CBO concludes the reduction in debt is due to an increase in revenues (up 13% over this time period last fiscal year) although the May 2006 deficit was $3 billion or $4 billion larger than projected. The added expense was due to a $3 billion revision in the estimated subsidy costs for loan guarantees previously issued and outlays for the Department of Education were higher.

JUNE

	FY 2005	FY 2006
Receipts	$235 billion	$265 billion
Outlays	$212 billion	$246 billion
Surplus	$ 23 billion	$ 19 billion

According to the CBO receipts were about $30 billion higher this June with individual income and payroll taxes accounting for over half the increase. Withholding rose by $11 billion. Quarterly payments of income taxes rose $9 billion. Payments in June are typically high because most firms pay estimated taxes then.

Outlays increased mostly due to a shift in payment dates. The July 1^st payments, because of the calendar, were made at the end of June.

RECEIPT AND OUTLAY TOTALS FOR FY 2006 THROUGH JUNE, 2006.

	FY 2005	FY 2006	Change
Receipts	$1,604 trillion	$1,810 trillion	$ 206 billion
Outlays	$1,854 trillion	$2,019 trillion	$165 billion
Deficit	$-249 billion	$-208 billion	$ 41 billion

WHERE DID THE MONEY COME FROM?

Source	FY 2005	FY 2006	% Change
Individual taxes	$694 billion	$791 billion	+14.1
Corporate taxes	$198 billion	$250 billion	+26.4
Social Insurance	$601 billion	$643 billion	+7.0
Other	$111 billion	$125 billion	+12.6
Total	$1,604 trillion	$1,810 trillion	+12.8

WHERE DID THE MONEY GO?

Category	FY 2005	FY 2006	Actual Change	Adjusted Change
Defense	$347 billion	$375 billion	7.9 %	7.1%
Social Security	$384 billion	$406 billion	5.8%	5.8%
Medicare	$245 billion	$298 billion	17.5%	15.5%
Medicaid	$138 billion	$138 billion	-0.2%	-0.2%
Other Programs	$598 billion	$639 billion	6.9%	7.2%
Subtotal	$1,713 trillion	$1,846 trillion	7.8%	7.5%
Debt Interest	$141 billion	$172 billion	22.1%	22.1%
Total	$1,854 trillion	$2,019 trillion	8.9%	8.6%

“Outlays through June were 8.6 percent higher than in the first nine months of 2005, CBO estimates, after adjusting for calendar-related shifts in the timing of certain payments. Much of that increase stems from three factors:

Spending related to Hurricanes Katrina and Rita (payments for disaster assistance and flood insurance have quadrupled so far this year, compared with spending at the same point last year);
Growth in net interest on the public debt (up 22 percent through June, because of both higher interest rates and rising debt); and
Spending for the new Medicare prescription drug program (which has added $19 billion in outlays so far this year, excluding some offsetting savings in the Medicaid program, which are not readily identifiable).

Spending on all other government activities is up by less than 5 percent relative to the 2005 level. Defense spending has risen by about 7 percent; nondefense spending (other than the specific items mentioned above) is up by about 4 percent.

Medicaid spending has been flat so far this year, partly because the new Medicare drug program is picking up some costs previously paid by Medicaid; spending for Medicare (other than prescription drugs) has grown at a 7.5 percent rate.”

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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