Headlines touted a budget surplus of $58 billion in April for the U.S. government, good news for President Barack Obama as he goes from low to high gear on his 2012 campaign for reelection.
However, there’s bad news for the U.S. taxpayer because the Congressional Budget Office estimates the Treasury will record a deficit of $721 billion for the first seven months of 2012.
CBO said April tax collections rose by 10 percent, partly because taxpayers filed for refunds earlier:
“Receipts this April were $319 billion—$30 billion, or 10 percent, higher than collections last April, CBO estimates. The largest boost to net receipts came from a $14 billion decline in the amount of refunds issued. Refunds were lower, in large part, because some that ordinarily would have been recorded in April were made in prior months.”
Figures CBO cited in a budget review posted at the agency’s website reflect “shifts in the timing of certain payments.”
Meanwhile, social security payments increased by $22 billion as spending for Medicare increased by $7 billion amid adjustments to the Medicare Advantage program that will probably eventually end that program in its present form because after the November election, more cuts will kick in in 2013.
Spending for Medicaid declined by $26 billion, said CBO, “because legislated increases in the federal government’s share of the program’s costs expired in July, 2011.”
Spending in the category tagged “Other Activities” increased by $5 billion compared to the first seven months of 2011. Among the increases:
- The Troubled Asset Relief Program (TARP) got $18 billion more, “mostly because of a change in the estimated cost of earlier transactions.”
- Payments to the scandal-plagued Fannie Mae and Freddie Mac government sponsored enterprises increased by a whopping $12 billion.
CBO didn’t mention other sources of revenue, but some increases may have actually been an increase in withheld taxes because many companies cut wages during the downturn but restored the cuts in 2011. In addition to that, other taxes such as the tanning bed tax may have had an impact. ObamaCare, the president’s healthcare tax bill, also imposed restrictions in 2011 on private FSAs and HRAs, accounts consumers fund for healthcare costs. Those plans no longer permit purchasing over the counter medicines unless a physician gives you a prescription.
A new excise tax on medical device manufacturers will almost certainly be passed along to consumers in 2013—a boon to a financially challenged government but a potential hardship on the elderly.
Bottom line on that surplus—the U.S. Treasury is still deeply in debt and even the amount of the surplus depends on how you crunch the numbers. For instance, CBO said without those timing shifts, the surplus would have been $27 billion. It is quite possible that May will show a deficit.
CBO is routinely described as a nonpartisan agency.
(Commentary by Kay B. Day/May 8, 2012)
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