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TheWeekInCongress.com

The Monthly Budget Review

September 2007

The federal budget deficit was about $272 billion in the past 11 months of FY 2007 showing a decrease of $33 billion over the same period last year. CBO reports that it anticipates a substantial surplus in September from quarterly payments of estimated income taxes and lower-than-normal Social Security outlays. The anticipated September surplus is expected to bring the deficit down to a fiscal year end of $158 billion. The amount will represent 1.2% of the gross domestic product. Last year the percentage was 1.9%.

WHAT HAPPENED?

The August deficit was $115 billion, $50 billion more than last year but due to a shift of some federal payments from September to August the deficit would only have been $7 billion over the previous year.

Receipts were about $12 billion higher than last August. The gains are explained by higher withholding for individual income and payroll taxes that rose by $11 billion. Individual income tax returns were $5 billion lower than last August due to an accounting adjustment that added $6 billion to refunds in 2006. Corporate income taxes are about $3 billion less than last August.

CBO explained that the $62 billion growth in outlays this August were the result of two days of September falling on a weekend and Labor Day. About $43 million in payments normally made at the beginning of September were made in August. The other factor affecting outlay disparities is the $6 billion reduction due to the above mentioned accounting adjustment.

	Actual FY 2006	Prelim FY 2007	Estimated Change
Receipts	$2.123 trillion	$2.282 trillion	$58 billion
Outlays	$2.428 trillion	$2.554 trillion	$125 billion
Deficit	-$304 billion	-$272 billion	$33 billion

WHERE THE MONEY CAME FROM

Major Source	Actual FY 2006	Prelim FY 2007	Percent Change
Individual taxes	$933 billion	$1,043 trillion	11.8%
Corporate taxes	$268 billion	$293 billion	9.3%
Social Insurance	$768 billion	$798 billion -4.1%	3.9%
Other	$154 billion	$148 billion	-4.1%
Total	$2.123 trillion	$2.282 trillion	7.5%

Total receipts were $158 billion or 7.5% higher than last year with individual income taxes showing the highest gain (12%) over 2006. Payroll taxes increase by $30 billion or 4%.

WHERE THE MONEY WENT

Major Category	Actual FY 2006	Prelim FY 2007	Actual-Adjust % Change
Defense	$454 billion	$486 billion	7%	6%
Social Security	$499 billion	$553 billion	10.9%	5.9%
Medicare	$352 billion	$413 billion	17.5%	11.9%
Medicaid	$167 billion	$1176 billion	5.5%	5.5%
Other	$740 billion	$693 billion	-6.4%	-7.5%
Subtotal	$2.212 trillion	$2.321 trillion	4.9%	$2.4%
Net interest on the public debt	$216 billion	$233 billion	7.9%	7.6%
Total	$2.428 trillion	$2.554 trillion	5.2%	2.8%

This Report is revised from the original CBO report compiled by CBO’s Mark Booth, Chad Chirico, Barbara Edwards, and Kathy Gramp.

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