The Congressional Budget Office has released its estimate for the fiscal year 2012, just ended on September 30 and the news is good. The federal deficit was just under $1.1 trillion, compared to just under $1.3 trillion at the end of fiscal year 2011, a reduction of $207 billion. As a percentage of the GDP, the 2012 deficit dropped to 7.0 per cent, down from 8.7 percent in 2011 and 9.0 percent in 2010. The actual deficit numbers will be released later this month by the Treasury Department
The September 2012 numbers show an increase in receipts of about $23 billion, or 9% higher than the same period a year ago and a decrease of $115 billion in spending.
Total Receipts Were Up by 6 Percent in Fiscal Year 2012
Receipts in fiscal year 2012 totaled $2.5 trillion, $148 billion more than those in the same period last year. Compared with collections in fiscal year 2011:
Net receipts from corporate income taxes grew by $61 billion (or 34 percent), largely because of changes in tax rules in recent years.
Individual income tax receipts grew by $37 billion (or 3 percent), as wages and salaries grew modestly, pushing up withheld tax payments; nonwitheld tax payments rose as well.
Receipts from social insurance taxes rose by $32 billion (or 4 percent), reflecting greater withholding for payroll taxes and an increase in unemployment insurance taxes as states continued to replenish trust funds that were depleted by the recession.
Receipts from other sources increased, on net, by about $18 billion (or 9 percent).
Outlays Were Down by 1.6 Percent in Fiscal Year 2012
Outlays in fiscal year 2012 totaled $3.5 trillion, $59 billion (or 1.6 percent) less than spending in the same period last year. Excluding adjustments recorded in the budget for the estimated cost of credit programs (mainly the Troubled Asset Relief Program), however, the government’s outlays decreased by 2 percent relative to spending in 2011.
By CBO’s estimates, outlays decreased for several major categories of spending:
Medicaid—Outlays fell by $24 billion (or 9 percent) because legislated increases in the federal share of the program’s costs expired in July 2011.
Unemployment benefits—Spending dropped by $30 billion (or 24 percent), mostly because fewer people have been receiving benefits in recent months.
Defense—Outlays fell by $19 billion (or 3 percent), after adjusting for timing shifts, in part because of lower spending for military operations in Afghanistan and Iraq.
Education programs—Net outlays were lower by $29 billion (or 30 percent), excluding changes recorded in the budget for the estimated cost of student loans. That decline has occurred largely because of waning spending from funding provided by the American Recovery and Reinvestment Act. (Most of that spending occurred before 2012.)
Coupled with the recent good news of unemployment falling to 7.8%, its lowest level in four years, this is proof positive that the policies initiated by the Obama administration, despite the most obstructionist Congress in living memory, are working. Furthermore, the CBO has released the estimate for the effects of enacting Obama’s budget proposal for 2013 and found that, if enacted, the deficit would shrink to $977 billion, or 6.1 percent of the GDP, a full 2 percentage points below that of 2012 and effectively halving the budget deficit inherited when Obama took office. Another campaign promise fulfilled.
Additionally, the CBO found that the percentage of the deficit in relation to the GDP would continue to decline through 2017, when it is estimated to bottom out at 2.5 percent and then begin a slow upward trend, reaching 3 per cent by 2022. Beyond that, the CBO cannot make estimates and has also provided the caveat that changing conditions can affect the numbers.
To be sure, we are not out of the woods yet and there are still challenges ahead. However, we are on track to bringing the country back to financial stability and as new scenarios unfold, our representatives in Washington will have to make adjustments and tweaks to policy. The president has stated as much.
Those on the right are fond of posing the question: Are you better off than you were four years ago? Although there are admittedly those who can’t feel it yet, the answer is in the numbers and the numbers tell us we are better off and things are improving every day.
So why are those on the right so upset by the good news? Why do they insist that the numbers lie when the proof is right there in front of them? I can only speak for myself but I believe they hate this African-American president so much that they would rather see this country fail than prosper under the leadership of a man they consider to be The Other.