Monthly Budget Review for November 2019

The federal budget deficit was $342 billion for the first two months of fiscal year 2020, CBO estimates, $36 billion more than the deficit recorded during the same period last year. Revenues and outlays were higher—by 3 percent and 6 percent, respectively—than in October and November 2018.

Because December 1 fell on a weekend in 2019 and in 2018, outlays through November in each fiscal year were boosted by the shift of certain payments from December to November. If not for those timing shifts, outlays so far this year would have been $44 billion greater than those in the same period last year, and the deficit would have risen less—by $32 billion.

Total Receipts: Up by 3 Percent in the First Two Months of Fiscal Year 2020

Receipts totaled $471 billion during the first two months of fiscal year 2020, CBO estimates—$12 billion more than during the same period last year. The changes from last year to this year were as follows:

• Receipts from individual income and payroll (social insurance) taxes together rose by $17 billion (or 4 percent).
  • Amounts withheld from workers’ paychecks rose by $16 billion (or 4 percent). That change reflects increases in wages and salaries.
  • Nonwithheld payments of income and payroll taxes fell slightly—by less than $1 billion (or less than 1 percent); individual income tax refunds fell by $1 billion (or 7 percent), increasing net receipts. Receipts from those two sources generally are small at this point in the fiscal year.
• Receipts from corporate income taxes rose, on net, by $1 billion (or 14 percent). Because corporate income tax receipts in October and November generally represent a small percentage of the year’s total, the results for those two months are not a significant indicator of receipts for the whole fiscal year. For most corporations, the first quarterly estimated payment of those taxes in the current fiscal year is not due until December 16.

• Receipts from other sources, on net, declined by $5 billion (or 11 percent).
  • Excise taxes fell by $9 billion (or 40 percent), partly because of payments received in October 2018 for the tax on health insurance providers; in 2019, that tax is subject to a one-year moratorium. The next payment is due on September 30, 2020.
  • Customs duties increased by $4 billion (or 32 percent), in part because of additional tariffs imposed by the Administration, primarily on imports from China.

Total Outlays: Up by 6 Percent in the First Two Months of Fiscal Year 2020

Outlays for the first two months of fiscal year 2020 were $813 billion, $49 billion higher than they were during the same period last year, CBO estimates. The shift of certain payments from December to November in 2018 and 2019 increased outlays in November of each year; removing the effects of the shifts would reduce the year-to-year increase by $5 billion. The discussion below reflects adjustments to exclude the effects of those timing shifts.

The largest increases in outlays were in the following categories:

• Outlays for the largest mandatory spending programs increased by 7 percent:
  • Social Security benefits rose by $10 billion (or 6 percent), because of increases both in the number of beneficiaries and in the average benefit payment.
  • Medicare outlays grew by $6 billion (or 6 percent), some of which reflects the payment made to prescription drug plans each autumn to account for unanticipated increases in spending in the preceding calendar year
  • Medicaid outlays increased by $6 billion (or 9 percent), because of increases in health care costs per capita.
• Spending for military programs of the Department of Defense rose by $8 billion (or 7 percent), mostly in the areas of operation and maintenance and military personnel.
• Outlays for the Department of Education (included in “Other,” below) increased by $3 billion (or 25 percent), largely because of increased subsidy costs for federal student loans.

For other programs and activities, spending increased or decreased by smaller amounts.

Estimated Deficit in November 2019: $207 Billion

The federal government incurred a deficit of $207 billion in November 2019, CBO estimates—$2 billion more than the deficit in November 2018. Outlays in November of both years were affected by shifts in the timing of certain federal payments that otherwise would have been due on a weekend; those shifts increased outlays by $50 billion in 2019 and by $45 billion in 2018. If not for those shifts, the deficit in November 2019 would have been $158 billion, or $2 billion less than the deficit in November 2018.

CBO estimates that receipts in November 2019 totaled $226 billion—$20 billion (or 10 percent) more than those in the same month last year. A $15 billion (or 8 percent) increase in withholding of individual income and payroll taxes explains most of that difference. Corporate income taxes increased from a net negative amount of $2 billion last November to less than $1 billion positive net receipts this November. Customs duties increased by $2 billion (or 25 percent).

Total spending in November 2019 was $433 billion, CBO estimates. Excluding the payments that were shifted into November because December 1 fell on a weekend this year and last year, outlays in November 2019 were $17 billion more than the sum in November 2018.

The largest changes in outlays were as follows (the amounts reflect adjustments to exclude the effects of the timing shifts):

• Social Security benefits rose by $5 billion (or 6 percent).
• Medicare spending increased by $3 billion (or 6 percent).
• Outlays for Medicaid rose by $3 billion (or 9 percent).

Spending for other programs and activities increased or decreased by smaller amounts.

Actual Deficit in October 2019: $134 Billion

The Treasury Department reported a deficit of $134 billion for October—$1 billion more than CBO estimated last month, on the basis of the Daily Treasury Statements, in the Monthly Budget Review: Summary for Fiscal Year 2019.