During December, the federal government recorded a deficit of $80 billion, according to the monthly balance sheet [.pdf] released today from the US Treasury. This brings the total deficit for the first quarter of fiscal year 2011, which began in October, to $371 billion. At the end of the first quarter of fiscal year 2010, the deficit totaled $388 billion [.pdf] – reflecting a modest decline for the current year. However, this decline is too slight to show any sort of promising trend for the ever growing deficit.
Expenditures in December totaled $317 billion, whereas receipts totaled $237 billion. This $80 billion deficit is $12 billion less than December of fiscal year 2010, when the deficit totaled $92 billion. Further, since the federal government makes payments to different programs on the first of each month and January 1st fell on a weekend, these payments were accelerated to December 30th, which resulted with an additional $24 billion in expenditures. Excluding these expenditures, the deficit for this December would have been $36 billion less than last December, according to the Congressional Budget Office [.pdf].
Though, the major reason why the deficit for fiscal year 2011 is lower is not a result of decreased spending, but is instead due to increased receipts. Compared to last year, expenditures were $6 billion more this December, while receipts were $18 billion more. For the entire quarter, expenditures were $26 billion more this year, while receipts were $44 billion more. Therefore, higher tax receipts for the current year are why the deficit shows a modest decline, not decreased spending.
In fact, among the 28 major federal agencies, 18 have had a higher rate of spending this year. The Environmental Protection Agency has had the largest increase of spending, with a spike of 35% through the first quarter. Contrarily, the Department of Labor has had the largest decrease of spending, with a decline of 14% through the first quarter. As this comparison shows, there are federal agencies that have decreased their rates of spending, but not to the extent that other agencies have increased their rates of spending.
Regarding the receipts of the federal government, individual income taxes total $256 billion through the first quarter, which is a 19% increase compared to the same period of the previous fiscal year. On the other hand, corporate income taxes total $36 billion through the first quarter, which is a 6% increase compared to last year. While this comparison shows more tax revenue for both of these categories of tax payers, it more importantly shows how individuals have paid a much higher percentage of taxes this year. As a result, the major reason why the federal government is receiving more money this year is a result of more tax revenue from individuals.
Lastly, this analysis shows how the federal government continues to spend more, while individuals pickup a majority of the tab. Moreover, in the best case scenario, the days of a budget surplus are years away.