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Economy in Brief

U.S. Budget Deficit is Reduced by Revenue Strength and Outlay Weakness
by Tom Moeller  March 13, 2014

The Federal Government posted a $193.5 billion budget deficit during February of FY 2014. The latest figure was smaller than the Action Economics Forecast Survey expectation of a $215.0 billion deficit. In the first five months of this fiscal year, the deficit total of $377.4 billion compares to $494.0 billion last year. It was the smallest budget deficit during the first five months of any fiscal year since 2008. The latest projection from the Congressional Budget Office calls for a deficit of $514 billion this year compared to $680 billion last year.

The smaller budget deficit so far this fiscal year reflects a 9.3% y/y rise in total revenues. Corporate income taxes increased 19.6% y/y while the improved labor market raised social insurance taxes by 15.7%. Individual income taxes increased 2.6% y/y and excise taxes rose 1.6% y/y.

On the spending side net outlays fell 1.5% so far this fiscal year versus last year. Outlays were led lower by a 4.5% y/y reduction in defense outlays and a 4.3% y/y falloff in interest payments. Income security payments increased a moderate 3.7% y/y. Social security payments rose 4.6% y/y and spending on health programs gained 6.7% y/y. Medicare outlays increased 8.5% y/y while veterans benefits jumped 20.1% y/y.

Haver's basic data on Federal Government outlays and receipts, and summary presentations of the Budget from both OMB and CBO are contained in USECON. Considerable detail is given in the separate GOVFIN database.

The Fiscal Cliff and the Dynamics of Income from the Federal Reserve Bank of Chicago can be found here.

 US Government Finance Feb FY'13 FY'12 FY'11 FY'10
Budget Balance -- $-193.5 bil. $-680.3 bil. $-1,089.2 bil. $-1,296.8 bil. $-1,294.2 bil.
  As a percent of GDP -- -- 4.1 6.8 8.4 8.8
% of Total YTD FY'14
Net Revenues (Y/Y % Change) 100 9.3% 13.3% 6.4% 6.5% 2.7%
  Individual Income Taxes 47 2.6 16.3 3.7 21.5 -1.8
  Corporate Income Taxes 10 19.6 12.9 33.8 -5.4 38.5
  Social Insurance Taxes 34 15.7 12.1 3.2 -5.3 -2.9
  Excise Taxes 3 1.6 6.3 9.2 8.2 7.1
Net Outlays (Y/Y % Change) 100 -1.5 -2.4 -1.7 4.1 -1.8
  National Defense 18 -4.5 -6.3 -3.9 1.7 4.6
  Health 10 6.7 3.1 -7.0 1.0 10.4
  Medicare 14 8.5 5.5 -2.8 7.5 5.0
  Income Security 16 3.7 -1.1 -9.1 -4.1 16.7
  Social Security 24 4.6 5.2 5.8 3.4 3.5
  Veterans Benefits 4 20.1 11.5 -2.0 17.3 13.6
  Interest 6 -4.3 0.4 -3.0 15.8 2.9
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