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MONTHLY BUDGET REVIEW …
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Created: Mon Jul 7 17:22:51 2008
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MONTHLY BUDGET REVIEW
Fiscal Year 2008
A Congressional Budget Office Analysis
Based on the Monthly Treasury Statement for May
and the Daily Treasury Statements for June July 7, 2008
The federal government incurred a deficit of $268 billion for the first nine months of fiscal year 2008, CBO estimates,
$148 billion more than the shortfall recorded during the same period in 2007. About $79 billion of that change is due
to the distribution to individuals of the tax rebates enacted in the Economic Stimulus Act of 2008. Compared with their
level in 2007, outlays have risen by more than 6 percent, whereas revenues have declined by about 1 percent.
MAY RESULTS than those in the same month of the previous year.
(Billions of dollars) Increases in individual income and payroll tax receipts
largely offset the decline in corporate tax receipts.
Preliminary Withholding for income and payroll (social insurance)
Estimate Actual Difference taxes was about $6 billion (5 percent) higher than such
collections in June of last year. CBO estimates that about
Receipts 125 124 -1 one-third of that gain was due to the calendar--the net
Outlays 290 290 * effect of one additional Monday and one fewer Friday than
Deficit (-) -165 -166 -1 in June 2007. Nonwithheld receipts of individual income
and payroll taxes, mainly representing the second quarterly
Sources: Department of the Treasury; CBO.
payment for calendar year 2008 of individuals' estimated
* = between zero and $500 million.
income taxes, rose by about $1 billion (or 2 percent).
The Treasury reported a deficit of $166 billion for May,
Outlays in June were $44 billion lower than those in the
about $1 billion more than CBO had projected on the
same month last year because of calendar-related shifts and
basis of the Daily Treasury Statements.
certain one-time receipts, which together reduced outlays
by about $62 billion. Outlays this June were unusually low
ESTIMATES FOR JUNE
because the first day of the month fell on a weekend,
(Billions of dollars)
shifting about $22 billion in payments from June to May.
Actual Preliminary Estimated By contrast, outlays were unusually high in June 2007
FY2007 FY2008 Change because July 1 fell on a weekend, which shifted about $21
billion from July to June. Outlays this June were also
Receipts 277 255 -21
reduced by the receipt of $19 billion from the 2008 auction
Outlays 249 205 -44
of licenses to use the electromagnetic spectrum. Those
Surplus 27 51 23
reductions were partially offset by the estimated $9 billion
in outlays for stimulus rebates to individuals whose rebate
exceeded their federal income tax liability. In the absence
Sources: Department of the Treasury; CBO.
of the timing shifts, spectrum receipts, and rebate
Quarterly payments of individual income taxes and payments, spending in June would have grown by about $9
corporate income taxes typically result in budget billion (or 4 percent).
surpluses in June. The surplus for the month this year
was about $51 billion, CBO estimates, $23 billion more BUDGET TOTALS THROUGH JUNE
than the corresponding figure last year. The increase in (Billions of dollars)
the June surplus is largely attributable to certain one-time Actual Preliminary Estimated
receipts and to differences in the timing of some FY2007 FY2008 Change
payments. Adjusted for those factors, the surplus would
have been lower than it was last June, even in the absence
of rebate payments, which totaled $28 billion this June. Receipts 1,945 1,929 -16
Outlays 2,066 2,198 132
CBO estimates that net receipts were about $21 billion (or Deficit (-) -121 -268 -148
8 percent) lower this June than they were in June 2007. Sources: Department of the Treasury; CBO.
Nearly all of the decline--$19 billion--can be attributed
to payments to individuals of the tax rebates (in addition, CBO estimates that the federal government incurred a
an estimated $9 billion of those rebates was recorded as deficit of $268 billion for the first three-quarters of fiscal
outlays). Net corporate income tax receipts in June were year 2008, more than twice the deficit recorded for the
$8 billion (or 12 percent) lower than in June 2007, the same period last year.
12th consecutive month in which such receipts were lower
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 JUNE OUTLAYS THROUGH JUNE
(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 885 872 -1.5
Corporate Income 280 238 -14.7 Defense--Military 397 438 10.3 10.3
Social Insurance 663 690 4.1 Social Security
Other 118 129 9.5 Benefits 430 453 5.3 5.3
Total 1,945 1,929 -0.8 Medicareb 290 285 -1.8 3.4
Medicaid 144 152 5.6 5.6
Sources: Department of the Treasury; CBO. Other Programs
and Activities 620 679 9.5 9.6
Total receipts are about $16 billion (or almost 1 percent)
Subtotal 1,882 2,007 6.6 7.5
lower for the fiscal year through June than those in the
Net Interest on the
first nine months of fiscal year 2007. Excluding the
Public Debt 185 191 3.5 3.5
effects of the tax rebates, total receipts rose by about $35
billion (or roughly 2 percent). Total 2,066 2,198 6.4 7.2
Net receipts from individual income and payroll taxes for Sources: Department of the Treasury; CBO.
the first nine months of the fiscal year showed gains a. Excludes the effects of payments that were shifted because of
relative to last year. Withholding for individual income weekends or holidays.
b. Medicare outlays are net of proprietary receipts.
and payroll tax receipts increased by about $59 billion (or
4.5 percent), indicating continued increases in wages and
salaries. In the April-June quarter, withholding rose by Adjusted for shifts in the timing of certain payments,
about 3 percent. Nonwithheld receipts of income and spending through June was about 7 percent higher than in
payroll taxes increased by $21.5 billion (or 5 percent) in the first nine months of 2007, CBO estimates. In the
the first nine months of the fiscal year. Most of that absence of rebate payments, which added an estimated
increase occurred during the February-May tax filing $28 billion to the outlay total through June, spending
season and stemmed from economic activity in 2007. would have increased by about 6 percent. Defense
Refunds of individual income tax receipts rose by $65 outlays were up by 10 percent over this period;
billion; about $51 billion of that gain resulted from rebate nondefense spending, excluding rebate payments, rose by
payments. 5 percent on an adjusted basis.
Net corporate receipts declined by about $41 billion (or Total spending for the three major entitlement
15 percent) during the first three-quarters of the fiscal programs--Social Security, Medicare, and Medicaid--
year. Receipts fell by 13 percent in the April-June grew more slowly in the first nine months of 2008 than in
quarter, when most firms made their first two quarterly fiscal year 2007 as a whole, increasing by an average of
payments for tax year 2008, indicating continued 5 percent through June compared with 7 percent last year.
weakness in corporate earnings. Some of that quarterly This year's slower pace is partly due to smaller cost-of-
decline probably also represents the effects of enhanced living adjustments for Social Security benefits and
business depreciation provisions enacted in the Economic reductions in Medicare payments to prescription drug
Stimulus Act of 2008. providers to correct for overpayments made in 2006.
The other, smaller sources of receipts--from the Federal Excluding rebate payments, outlays for other programs
Reserve, excise taxes, customs duties, estate and gift and activities rose by about 5 percent through June.
taxes, and miscellaneous fees and fines--all increased Several programs have experienced much faster growth,
during the first half of the fiscal year, with overall gains particularly veterans' medical care, unemployment
of about $11 billion (or 9.5 percent). Almost half of that benefits, and food and nutrition programs, each of which
increase came from payments to the Treasury by the posted double-digit gains relative to the first nine months
Federal Reserve, primarily due to increases earlier this of 2007. Those increases have been partially offset,
year in the yields on its portfolio of securities and gains however, by higher receipts from federal oil and gas
on its holdings of assets denominated in foreign leases and by proceeds from the 2008 spectrum auction.
currencies as the dollar has depreciated.
Outlays for net interest on the public debt were up by 3.5
percent relative to those outlays in the first nine months of
2007, primarily because of the rising cost of inflation-
indexed securities.
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.