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Yearly deficit estimate remains below $1 trillion
The federal budget deficit is still on pace to fall under $1 trillion this year, the Congressional Budget Office (CB0) estimated on Thursday.
The CBO is forecasting that the deficit, which ran at $495 billion for the first five months of fiscal 2013, will hit $845 billion this year, the same estimate from January.
The shortfall through February was $86 billion less than the same period last year. The total budget deficit was $1.1 trillion in 2012.
The narrowing deficit was helped by a 14 percent boost in total revenue, including an additional $103 billion, or a 14 percent increase, in individual income and payroll taxes.
Taxes withheld from workers’ paychecks rose by $64 billion, or 9 percent, because of the expiration of a two-year payroll tax cut, which ended in January.
Revenues were further pushed up by the Internal Revenue Service’s delay in processing tax returns because of the tax legislation enacted at the beginning of January.
The delay pushed down refunds by $26 billion, or 25 percent.
Payments of estimated taxes increased at the end of last year because some people shifted income into last year in expectation of higher tax rates in 2013, increasing those receipts by $15 billion (or 16 percent), CBO reported.
Corporate income taxes increased by $11 billion, or 18 percent.
Offsetting those gains was a $2 billion drop in receipts from unemployment taxes.
By CBO’s estimate, federal spending totaled $1.5 trillion during the first five months of the fiscal year.
Without shifts in the timing of certain payments, spending in that period would have been less than 1 percent more than the outlays during the same period in fiscal year 2012.
But for some major programs and activities, spending increased — Social Security, Medicare and Medicaid were all higher than the same period last year.
Social Security benefits increased by the largest amount — by $19 billion, or 6 percent — while Medicare spending increased by $13 billion (about 7 percent) and spending for Medicaid rose by $9 billion, or more than 9 percent.
Spending ticked up in other areas, including agriculture, which saw an increase by $13 billion, primarily because of higher crop insurance payments that were doled out because of a severe Midwestern drought.
The Federal Emergency Management Agency got a $6 billion boost because of emergency spending for Hurricane Sandy.
In contrast, defense spending dropped by $14 billion, or 5 percent, and the cost of unemployment benefits declined by $10 billion, or almost 24 percent, mostly because fewer people have been receiving benefits in recent months.
Fannie Mae and Freddie Mac also cost the government much less money, with payments down by $14 billion compared with the same time last year, as the government-controlled enterprises shed bad loans and regain their financial footing.
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