CBO shows decline in budget deficit

The Congressional Budget Office reported Tuesday that the federal budget deficit is declining this year compared to fiscal 2012.

For the first seven months of 2013, the deficit was $489 billion. That is $231 billion less than the budget shortfall for the comparable period last year.

The decrease is almost entirely due to revenue increases. Revenues rose $200 billion and spending decreased only $11 billion.

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Individual income tax and social insurance payroll taxes are up 16 percent this year compared to last year. 

In January, Congress and the White House agreed to allow income taxes on those making more than $400,000 per year to rise and to end a 2-percentage point payroll tax holiday for all workers.

That has contributed to $132 billion more in income taxes and $52 billion more in payroll tax revenue, CBO estimated.

On the spending side, major discretionary items like defense saw notable decreases, but the mandatory entitlement programs continued their relentless march upward in cost.

Whereas defense spending has fallen by $20 billion, spending increased by $25 billion for Social Security and $15 billion for Medicare as the baby boomer generation ages into retirement. 

In monthly terms, April saw its first surplus since 2008. The month is normally strong due to the influx of tax payments and this year, a $112 billion surplus was recorded.