During March, the federal government recorded a monthly deficit of $188 billion, according to the monthly budget results [.pdf] released today from the US Treasury. This brings the federal deficit for fiscal year 2011, which began in October, to a total of $829 billion. At the same point in fiscal year 2010, the federal deficit totaled $717 billion, resulting with a higher deficit in 2011. More specifically, the deficit halfway through fiscal year 2011 is 14% higher than the same point in fiscal year 2010.
In February, the federal deficit in fiscal year 2011 was actually 1.5% below the deficit at the same point in 2010. As a result, March brought a significant turnaround in the annual comparison of the federal deficit. Federal expenditures in March totaled $339 billion, whereas receipts totaled $151 billion. Comparatively, in March 2010, expenditures totaled $218 billion, whereas receipts totaled $153 billion. Therefore, expenditures in March 2011 were not only $120 billion higher than March 2010, but receipts in March 2011 were also less than March 2010.
The apparent surge in expenditures is mostly attributable to the Treasury Department. Among the two major categories of spending in the Treasury Department, including interest on the debt and everything else, expenditures in both categories were higher in March 2011. Expenses on the interest of the deficit totaled $24 billion in March, which is $3 billion more than last March. More importantly, expenses on everything else totaled $24 billion, which is a significant difference of $109 billion more compared to last March.
Last March, the Treasury Department revised the projected cost of the Troubled Asset Relief Program (TARP) with a $114 billion reduction to the program, according to the Congressional Budget Office. This revision resulted with the Treasury Department’s expenses on everything else totaling negative $85 billion in March of 2010, or $109 billion less than March 2011. Even though this shows how the acceleration in the federal deficit during March was not the result of a radical spending spree, there are other federal agencies with elevated spending in 2011 that also contributed to the rising deficit.
In fact, 14 of the 28 major federal agencies spent more in March 2011 than March 2010. The largest increases include the Department of Health & Human Services with an increase of $4.3 billion, the Department of Education with an increase of $2.2 billion, and the Social Security Administration with an increase of $2.1 billion. The largest decrease in spending occurred in the Department of Labor with a decline of $4.4 billion in monthly expenses, which is a result of a declining amount of individuals who are eligible for unemployment benefits.
Throughout the first six months of fiscal year 2011, the Labor Department reduced its expenses $18.1 billion compared to the same period in fiscal year 2010. This is by far the greatest reduction in the 2011 budget, with the next greatest reduction in the International Assistance Program totaling only $2.3 billion.
On the other hand, the greatest increases in the 2011 budget include: the Health & Human Services with an acceleration of $20.3 billion, the Social Security Administration with an increase of $13.3 billion, the Defense and Veterans Affairs Departments each increasing $7 billion, and a significant increase in the Treasury Department as previously mentioned.
Altogether, 17 of the 28 major federal agencies have spent more in 2011 than 2010. Expenses for fiscal year 2011 currently total $1.84 trillion, whereas expenses at this point in 2010 totaled $1.67 trillion. Even excluding the aforementioned revisions of the US Treasury last March, expenses of the federal government are still higher in 2011.
Simultaneously, federal government receipts are on the rise in 2011. As mentioned above, receipts in March were $2 billion less than receipts in March 2010, but March is the first month in fiscal year 2011 with lower receipts than the same month of the previous year. Halfway through fiscal year 2011, federal receipts currently total $1.02 trillion, which is $66 billion more than this point in fiscal year 2010. Despite higher tax revenues in 2011, federal expenses easily offset this slight boost in the budget.
Meanwhile, the federal deficit totaled $14.27 trillion at the end of March. Since a federal law prohibits the deficit from exceeding $14.29 trillion, the 112th Congress is on a crash course with the debt ceiling. If Congress does not agree to raise the debt ceiling in April, the US government will likely resort to IOUs while Congress debates the issue, as the government similarly did in both 1996 and 2002.