CBO Aug 7, 2015: Monthly Budget Review for July
Monthly Budget Review for July 2015
The federal government’s budget deficit amounted to $463 billion for the first 10 months of fiscal year 2015, CBO estimates. That deficit was $2 billion larger than the one recorded during the same period last year. If not for shifts in the timing of certain payments (which otherwise would have fallen on a weekend), the deficit for the 10-month period would have declined by $41 billion. On the basis of the government’s revenues and spending so far this fiscal year, CBO expects that the annual deficit will total about $425 billion, which would be less than the $486 billion that the agency projected in March. CBO will publish new multiyear budget projections later in August.
Hmm. $61 billion improvement over four months. Pretty significant however you slice it. And maybe puts some context on 75 year projections put out either by SSA or CBO.
Actual unadjusted deficit at end of July: $463 billion
Projected deficit at end of FY Sept: $425 billion
I am sure my Republican friends will credit this all to sequestration or Republican governors turning down Medicaid expansion or just some quirk in timing for pay-in of tax revenue, but a little third grade arithmetic shows that the U.S. will be running a projected surplus this next two months. Of $19 billion a month.
Damn you Obama for your job-killing, deficit busting ways!!
Not surprising. We generally have surpluses in December, June, and September, when quarterly estimated taxes are due. We would have them in March, too, but many refunds are going out then.
BTW congrats on your responses to BK in other thread.
Well it depends on what you mean by “surprising”. Because CBO is thoroughly aware of when quarterly estimated taxes come due and fully work those into their projections and presumably did so last March. That is the changes between the March PROJECTION and the July RESULT cannot be explained by purely seasonal effects. It is not like somebody at CBO did a head smacking and said “Man should we have taken into account those quarterly receipts in June?”
To say this another way departures from a seasonally adjusted baseline are significant. And in this case the overall improvement is projected at $61 billion even though current results only show $23 billion of that improvement to date. With June and its bulge of receipts behind us. So in thinking about it the bulk of our $38 billion in remaining surplus is likely coming from September tax receipts.
It does make your head spin but maybe we can just say that June and September are just coming in as even better than expected surplus months. And in so doing have lifted the entire baseline, or maybe moving average is the better term. (Because we can’t assume the slope of the baseline has permanently changed).
But stepping back a bit we are talking a radically improved deficit to GDP ratio here. Now Republicans will insist on talking increases in nominal debt and that after all we are talking ALMOST HALF A TRILLION DOLLARS here. But there are a lot of apples and oranges being compared and flung around in the air here. Because ten years ago the nominal deficit number were being offset by hundreds of billions of SocSec surpluses which have now shrunk considerably. Meaning that if we extracted actual “on budget” surplus/deficits out from the CBO Reports things start looking pretty rosy indeed even if we are not quite down in nominal unified budget numbers to those in most Bush Admin years.
People can and will spin these numbers. But once you start taking those flying apples and oranges out of the air and compare them side by side this $425 billion number starts looking awfully good.
Webb – the September 2014 surplus was $106b. So the surplus will be less in 2015.
That said, the full year deficit is well in control. The question I ask is what will it look like if the Fed does raise interest rates in line with the forecasts by SSA? Poof goes the good news…….
Sorry I was not clear, Bruce. I was saying that our running a surplus for the next two months is not surprising.
The change between projected and actual can be explained by the unexpectedly good jobs reports. More jobs mean more income tax revenue.
Warren I agree. This post was mostly a passive-aggressive challenge to Krasting based on some past exchanges.
And speaking of which. Krasting check your math.
That there will only be a surplus of $38 billion in August and September does not mean that September’s surplus will be less than $106 bn. For example a September surplus of $120 billion might just be offset by a August deficit of $82 billion and still get you to that $38 billion.
Take a model where your main revenue months are December, , March, June and September with average surpluses of $100 billion. What average deficits would you need to run the other 8 months to net out to a deficit of $400 billion? Lets see $75 billion x 8 = $600. Nope that only gets you to -$200 billion. Nope it would take $100 billion x 8 to do the job. So there seems to be exactly nothing wrong with a model that has an August deficit of $82 billion added to a $120 billion surplus in September that would have Sept 2015 exceeding Sept 2014. Why do you think different?