CBO Monthly Budget Review, May 2011
by Gary Therkildsen*, 5/13/2011
Last week, the Congressional Budget Office (CBO) released their latest Monthly Budget Review (MBR). While not as "salacious" as either the April or the February reports – at least in terms of how Capitol Hill is likely to react toward the release – this month’s review includes several interesting items.
First, the humdrum totals: Uncle Sam racked up an $871 billion budget deficit over the course of the first seven months of fiscal year (FY) 2011. The current deficit is roughly $70 billion higher than the deficit was at this time last year, which is attributable to several factors, including, as I explained in last month’s post, “adjustments made last year to Troubled Asset Relief Program (TARP) accounts.”
Moving beyond the total deficit figure, it’s interesting to note that it would be quite a bit higher had the Internal Revenue Service (IRS) not collected a larger-than-expected tax haul earlier this spring. According to CBO Director Doug Elmendorf, several different possibilities may explain the higher than expected tax receipts:
Certain types of income may have grown faster in 2010 than expected; income growth may have been more concentrated than expected among taxpayers subject to relatively high tax rates; and the impact of changes in tax law may have differed from what was projected.
Don’t be surprised if Republicans incorporate the above into their argument as to why taxes on the rich shouldn’t go up.
Another important tidbit from the CBO’s review: “[R]eceipts from social insurance taxes declined by about $31 billion (or 6 percent) because of the temporary reduction in payroll taxes that took effect in January.”
The loss of payroll taxes, combined with the continuity of the downturned economy, more than likely account for the Social Security board’s one-year downward revision of the insurance program’s solvency this morning.
But things aren’t all bad. Notwithstanding the payroll tax holiday, “total income and social insurance taxes withheld from paychecks rose by $46 billion (or 5 percent),” which, according to the CBO, “reflects, at least in part, the recent strength of wages and salaries in the economy.”
The rest of the report is pretty standard stuff, but check it out to soak up all the estimates, budget totals, and receipts and outlays you can get your hands on.
Image by Flickr user johnsolid used under a Creative Commons license.