CBO says deficit is running $66 billion lower than last year

The estimated federal budget deficit for the first nine months of fiscal 2012 is $66 billion lower than for the corresponding period in 2011, the non-partisan Congressional Budget Office said Monday.

The deficit through June is estimated to be $905 billion, down from $971 billion last year.

CBO said the main reason for the change is an increase in tax revenue. Corporate tax revenue grew by $42 billion, largely because tax rules on deductions for investment in equipment were changed, CBO said.

Revenue from individual taxes grew by $26 billion and social insurance tax receipts such as from payroll taxes grew by $17 billion.

The budgetary benefits from this increased revenue was offset by a 1 percent increase in spending. 

The increase is due to more outlays for the bank bailout. Spending on the Troubled Asset Relief Program grew by $62 billion through June.

Spending decreased elsewhere, CBO stated. Medicaid spending fell by $28 billion because a temporary increase in the federal share of the program ended. Spending on unemployment benefits decreased by $20 billion as fewer people collected benefits. 

CBO has projected the deficit to reach $1 trillion by the time fiscal 2012 ends in September. It would be the fourth year on a row of deficits over $1 trillion.

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