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MONTHLY BUDGET REVIEW …
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Created: Thu Aug 7 14:13:55 2008
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MONTHLY BUDGET REVIEW
Fiscal Year 2008
A Congressional Budget Office Analysis
Based on the Monthly Treasury Statement for June
and the Daily Treasury Statements for July August 6, 2008
The federal budget deficit was about $371 billion for the first 10 months of fiscal year 2008, CBO estimates, $213 billion
more than the shortfall recorded over the same period in 2007. Revenues were about 1 percent lower than in the same
period last year, whereas outlays have grown by almost 9 percent. CBO estimates that the federal government will end
fiscal year 2008 with a deficit in the vicinity of $400 billion, close to the amount the agency projected last March after
accounting for proposed supplemental appropriations.
JUNE RESULTS Partially offsetting the effect of the rebates on receipts was
(Billions of dollars) an increase of about $2 billion in withholding for payroll
and individual income taxes and an increase of $1 billion
Preliminary in nonwithheld taxes. Net corporate income taxes
Estimate Actual Difference increased by $1 billion this month, the first increase in
more than a year, probably because of collections of prior
Receipts 255 260 5 years' taxes.
Outlays 205 209 5
Surplus 51 51 * Outlays were $61 billion higher this July than in the same
month last year because of growth in spending and the
Sources: Department of the Treasury; CBO.
effects of the calendar. July 1, 2007, fell on a weekend,
Note: * = between zero and $500 million.
which shifted about $21 billion in outlays from July into
June last year. W ithout that timing shift, the growth in
The Treasury reported a surplus of $51 billion in June,
outlays this July would have totaled $40 billion (or about
about the same as CBO had projected on the basis of the
15 percent). The largest factor contributing to that increase
Daily Treasury Statements. The differences in revenues
was the $15 billion disbursed in July 2008 by the Federal
and outlays occurred primarily because more tax rebates
Deposit Insurance Corporation (FDIC) to cover insured
were classified as outlays (rather than as offsets to
deposits at failed financial institutions. (Much of that cost
revenues) than CBO anticipated.
should be recovered in the future as the FDIC liquidates the
assets held by those institutions and collects higher
ESTIM ATES FOR JULY
insurance premiums.) Defense spending grew by $6 billion
(Billions of dollars)
compared with last July, while outlays for rebate payments
Actual Preliminary Estimated and Medicare each contributed about $5 billion to the
FY2007 FY2008 Change increase. Growth in spending for Medicaid and Social
Security accounts for much of the remaining difference.
Receipts 170 166 -5
BUDGET TOTALS THROUGH JULY
Outlays 207 268 61
(Billions of dollars)
Deficit (-) -36 -102 -65
Actual Preliminary Estimated
Sources: Department of the Treasury; CBO. FY2007 FY2008 Change
CBO estimates that the federal government recorded a
deficit of $102 billion in July, about $65 billion more than Receipts 2,116 2,100 -16
the deficit recorded in July 2007. About $14 billion of Outlays 2,273 2,470 197
that increase was attributable to rebate payments Deficit (-) -157 -371 -213
stemming from the Economic Stimulus Act of 2008, Sources: Department of the Treasury; CBO.
which are recorded either as reductions in revenues or as
increases in outlays. CBO estimates that the government recorded a deficit of
about $371 billion for the first 10 months of fiscal year
Receipts were about $5 billion (or 3 percent) lower in July 2008, more than double last year's shortfall of $157 billion
2008 than they were in July 2007, CBO estimates. Tax for the same period. Outlays are higher and revenues lower
rebate payments of $8 billion account for that decline. than they were during the same period last year.
Note: Unless otherwise indicated, the figures in this report include the Social Security trust funds and the Postal Service fund,
which are off-budget. Numbers may not add up to totals because of rounding.
RECEIPTS THROUGH JULY OUTLAYS THROUGH JULY
(Billions of dollars) (Billions of dollars)
Actual Preliminary Percentage Percentage
Major Source FY2007 FY2008 Change Actual Preliminary Change
Major Category FY2007 FY2008 Actual Adjusteda
Individual Income 965 949 -1.6
Corporate Income 289 248 -14.4 Defense--Military 438 490 11.9 10.8
Social Insurance 729 758 4.0 Social Security
Other 133 145 8.9 Benefits 479 504 5.4 5.4
Total 2,116 2,100 -0.8 Medicareb 311 321 3.3 4.8
Medicaid 159 169 6.1 6.1
Sources: Department of the Treasury; CBO. Other Programs
and Activities 677 773 14.1 13.2
Total receipts for the first 10 months of fiscal year 2008
Subtotal 2,064 2,257 9.4 9.1
were about $16 billion (or 1 percent) lower than in the
Net Interest on the
same period last year. Individual income tax receipts
Public Debt 209 213 1.8 1.8
were about $16 billion (or 2 percent) lower because of
higher refunds paid to individuals. Net corporate tax Total 2,273 2,470 8.7 8.4
receipts fell by about $42 billion (or 14 percent).
Offsetting those declines were gains in social insurance Sources: Department of the Treasury; CBO.
receipts of $29 billion (or 4 percent) and $12 billion in a. Excludes the effects of payments that were shifted because of
other receipts, primarily Federal Reserve receipts (up $4 weekends or holidays.
b. Medicare outlays are net of proprietary receipts.
billion) and estate and gift taxes (up $3 billion).
After adjusting for shifts in the timing of certain
Higher refunds of individual income taxes resulted mainly
payments, outlays through July were about 8 percent
from the payments to individuals of the tax rebates
higher than in the same period last year. That rate of
authorized in the Economic Stimulus Act of 2008. CBO
growth is slightly faster than the 7 percent annual gains
estimates that about $93 billion in rebates was paid
averaged over the 2002-2007 period.
through July, of which $56 billion was classified as tax
refunds. (The remainder is classified as outlays because
Outlays for the broad category of other programs and
the rebate payments exceeded the taxes the individuals
activities grew rapidly through July, rising by 13 percent,
paid for 2007.) If the rebates are excluded from the year-
or $90 billion, on an adjusted basis. Roughly $37 billion
to-date activity, overall receipts would have been about
of that amount stemmed from rebate payments and
$40 billion (or 2 percent) higher than those in the same
another $15 billion came from the upfront cost of
period last year.
covering insured deposits at failed financial institutions.
Apart from those two types of payments, outlays for the
Partially offsetting the effect of the rebates on individual
category rose by about 6 percent.
income tax receipts were gains in withheld and
nonwithheld individual income taxes of $34 billion (or 4
Defense spending also experienced strong growth through
percent) and $20 billion (or 5 percent), respectively.
July, increasing by 11 percent relative to the first 10
W ithholding growth has weakened recently; the year-
months of fiscal year 2007. The Army's expenditures
over-year gain of about 3 percent experienced from April
rose by 16 percent over that period, driven largely by
through July contrasts with a gain of about 5 percent
higher procurement and operations and maintenance costs.
during the first half of fiscal year 2008.
All other defense spending rose by 8 percent.
Of the components of nonwithheld receipts, final
Medicare and Medicaid grew at similar rates through July,
payments with tax returns have increased by about 6
increasing by 5 percent and 6 percent, respectively, on an
percent this year, CBO estimates. That increase, recorded
adjusted basis. The growth in Medicare was slightly
mainly in April, largely reflects 2007 tax liabilities.
lower because of reductions in payments to prescription
Quarterly estimated payments of tax, the other main
drug providers to correct for overpayments made in 2006.
component, increased by about 4 percent. Those
Excluding those corrections, Medicare spending increased
payments mainly reflect taxpayers' estimates of 2008 tax
by 6 percent through July. In 2007, outlays for Medicare
liabilities.
and Medicaid rose by an average of 8 percent.
The decline in corporate receipts reflects diminishing
profits and, to a lesser extent, enactment in February of
the Economic Stimulus Act of 2008, which provided for
enhanced depreciation allowances in 2008.
Prepared by Mark Booth, Chad Chirico, Barbara Edwards, and Kathy Gramp.
This Monthly Budget Review and other CBO publications are available at www.cbo.gov.