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US Posts First Budget Surplus In 42 Months, And It Is Less Than Meets The Eye

Tyler Durden's picture




 

This afternoon the CBO reported a number that in itself is quite remarkable: in April, a preliminary estimate of US receipts and outlays showed that the US Treasury posted its first budget surplus in 42 months, or since September 2008. At $58 billion, the surplus was nearly $100 billion more than the the $40 billion deficit from a year earlier. Unfortunately, while superficially this number would have been worthy of praise, digging underneath the surface as always reveals 'footnotes'. Sure enough, in the aftermath of February which saw a record US deficit of $232 billion and March's $198 billion in net outlays, there was a "catch." As the CBO admits: "This April, the Treasury realized a surplus of $58 billion, CBO estimates, in contrast with the $40 billion deficit reported for the same month last year. The results in both years were influenced by timing shifts of certain payments; adjusted for those shifts, the surplus in April 2012 would have been $27 billion, compared with a deficit of $13 billion in April 2011.... The federal government incurred a budget deficit of $721 billion in the first seven months of fiscal year 2012, $149 billion less than the shortfall reported during the same period last year. Without shifts in the timing of certain payments, however, the deficit so far this year would have been only $92 billion smaller." In other words, without various temporal adjustments, the April surplus of $58 billion would have been completely netted out by the cumulative $57 billion in deficit time shifts. However, in an election year, every beneficial item such as this is an extended talking point as the president will gladly take the praise for a number which is indicative of anything but the underlying US financial "health." After all, others can bother with the explanations.

There is more: the April receipts of $319 billion were a near all time record, and $30 billion more than last year, again driven by the temporal vagaries of tax return season, and a big drop in tax refunds handed out. Sadly, this number is very much unsustainable as the end of tax season year after year sees a dramatic plunge in receipts. Furthermore, while cumulative receipts are running at about 6% higher compared to the prior year, they are $20 billion less than the CBO's own estimate for where revenues would have been at this point as of March. In other words, enjoy the surplus while you can: for another 30 or so days.

Finally, confirming the outlier nature of the surplus, the Treasury did not take any respite in funding its future liquidity needs, and raised a total of $110 billion in cash, proving that sadly the April number is anything but sustainable, especially with a surge in short-term debt maturities that will need to be funded.

Monthly surplus data:

Total April debt issuance:

And the full report from the CBO:

Federal Budget Deficit Totaled $721 Billion for the First Seven Months of 2012, CBO Estimates

The federal government incurred a budget deficit of $721 billion in the first seven months of fiscal year 2012, CBO estimates in its latest Monthly Budget Review—$149 billion less than the shortfall reported during the same period last year. Without shifts in the timing of certain payments, however, the deficit so far this year would have been only $92 billion smaller.

Because of the large inflows of tax revenues, the federal government usually runs a budget surplus in April—though that did not occur in 2009, 2010, and 2011. This April, the Treasury realized a surplus of $58 billion, CBO estimates, in contrast with the $40 billion deficit reported for the same month last year. The results in both years were influenced by timing shifts of certain payments; adjusted for those shifts, the surplus in April 2012 would have been $27 billion, compared with a deficit of $13 billion in April 2011.

April Collections Were Up By 10 Percent

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.

Withheld income and payroll taxes rose by $10 billion (or 7 percent), while nonwithheld receipts from those sources, largely from tax filings, rose by just $2 billion (or 1 percent). In addition, net corporate income tax receipts were $3 billion higher, and all other receipts $1 billion higher, on net, in April 2012 than in April 2011.

Total Receipts Through Seven Months Increased by 6 Percent

Including collections associated with the mid-April filing deadline, receipts through the first seven months were about $1.38 trillion—$74 billion higher than receipts recorded in the same period last year, CBO estimates. Total receipts are running a bit lower than what CBO anticipated when it prepared its most recent budget projections in March. Still, through April:

  • Total receipts from individual income taxes were up by $32 billion, or about 5 percent, compared with collections during the same period last year. Withheld individual income taxes rose by $21 billion (or 4 percent), reflecting growth in wages. Nonwithheld payments rose by $9 billion (or 4 percent), and refunds declined by about $2 billion, further boosting net receipts. Nonwithheld payments during the tax-filing season (February through April)—largely representing final payments for the 2011 tax year—increased by $3 billion (or 2 percent) over the prior year's payments, less than CBO had expected in its March baseline projections.
  • Social insurance receipts grew by $10 billion, or about 2 percent, mostly because collections of unemployment taxes rose by $7 billion as states replenished their recession-depleted trust funds.
  • Corporate taxes, largely reflecting corporations' activity in 2011, increased by $32 billion, or 40 percent. Those receipts are running below CBO's March baseline estimate because final payments made in March for tax year 2011 and estimated payments made in April for 2012 were lower than expected.

Outlays Through April Were About the Same When Adjusted for Timing Shifts

Spending for the first seven months totaled $2.1 trillion, about the same as it was during the same period last year, after the shifts in the timing of certain payments are taken into account. (The year-over-year changes discussed below reflect adjustments for those shifts.)

By CBO's estimates, outlays declined for several major categories of spending:

  • Medicaid spending fell by $26 billion (or 15 percent) because legislated increases in the federal government's share of the program's costs expired in July 2011.
  • Payments for unemployment benefits fell by $16 billion (or 21 percent) because fewer claims were filed in recent months.
  • Education spending dropped by $20 billion (or 35 percent), largely because of a decline in spending from funding provided in the American Recovery and Reinvestment Act.
  • Defense spending declined by about $11 billion (or 3 percent).

For some categories and programs, spending was greater:

  • Outlays recorded for the Troubled Asset Relief Program rose by $18 billion, mostly because of a change in the estimated cost of earlier transactions.
  • Net payments to the government-sponsored enterprises Fannie Mae and Freddie Mac increased by $12 billion.
  • Outlays for Social Security benefits were higher by $22 billion (or 5 percent);
  • Net spending for Medicare was up by $7 billion (or 2.5 percent).
 

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Mon, 05/07/2012 - 20:59 | 2405254 knukles
knukles's picture

Transitory seasonally adjusted seasonal adjustments of estimated uncountable aggregated other people's money.

Give unto Caesar, peons

 

gives new meaning to the footnotes of history

Mon, 05/07/2012 - 22:16 | 2405360 The Alarmist
The Alarmist's picture

Winning
The
Future


They really need to learn to hold their fire until the voters are actually paying attention, like three weeks before the election.

Tue, 05/08/2012 - 02:21 | 2405618 MayerRothschild
MayerRothschild's picture

Votes don't matter... All that matters is who counts to votes.

Mon, 05/07/2012 - 20:58 | 2405256 Dr Bob
Dr Bob's picture

We have a budget?

Mon, 05/07/2012 - 20:59 | 2405261 knukles
knukles's picture

Now there's a point for consideration.

Talk about Propaganda.
Yes, we have no budget that we've exceeded in evey imaginable measure

Mon, 05/07/2012 - 21:02 | 2405263 SHEEPFUKKER
SHEEPFUKKER's picture

So the debt ceiling won't have to be raised then? laugh out loud

Mon, 05/07/2012 - 21:07 | 2405266 Hulk
Hulk's picture

I am confused beyond repair...

Mon, 05/07/2012 - 21:16 | 2405278 knukles
knukles's picture

As your lawyer I'd recommend that you start drinking heavily.

Mon, 05/07/2012 - 21:27 | 2405296 ndotken
ndotken's picture

Obama, Bernanke and Geitner personify every aspect of Einstein's definition of insanity.

Mon, 05/07/2012 - 22:00 | 2405339 SilverTree
SilverTree's picture

"Created or saved 16 trillion dollars."

Mon, 05/07/2012 - 22:14 | 2405357 Hulk
Hulk's picture

Since we are taking it up the ass anyway, figure I'll go with a two buck Chuck enema...

Mon, 05/07/2012 - 21:14 | 2405267 knukles
knukles's picture

We need more folks like you in Congress :).

 

BTW, with that avatar, you'd qualify as a minority, maybe?  Never run a campaign but sure run some circuses....

 

Mon, 05/07/2012 - 20:58 | 2405257 Peter Pan
Peter Pan's picture

They seriously need to give up publishing statistics. The only two statistics needed are those you can access yourself 24 hours a day........your bank balance and your employment status. Everything else is government sponsored numerology.

Mon, 05/07/2012 - 21:00 | 2405258 WhiteNight123129
WhiteNight123129's picture

No too ugly this time around.

 

Mon, 05/07/2012 - 21:01 | 2405259 Manthong
Manthong's picture

THAT ought to be good for getting S&P 1400 back.

..and maybe worthy of a WH presser (forgotten tradition?). 

Mon, 05/07/2012 - 21:18 | 2405281 max2205
max2205's picture

FYI. The market hates surplus

Tue, 05/08/2012 - 03:06 | 2405651 Mentaliusanything
Mentaliusanything's picture

At least somone paid the Infernal Revenue Departmental.

Now all you do is shift the expeniture out, like no Gas in the car this month and live out of the pantry and ....... Drum roll.....

You have a surplus

This E- Con - Comical thingy is a breeze

Mon, 05/07/2012 - 21:05 | 2405264 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Reported deficit figures are about as honest as a game of three-card monte.  Follow the public debt outstanding because those figures don't lie.

Mon, 05/07/2012 - 21:10 | 2405271 Peter Pan
Peter Pan's picture

Public debt is a lie as well because it implies that it will be repaid which it won't be and it is also a lie because the interest paid on it is a sham perpetrated by the FED to further destroy any value in it.

The only truth about the debt is that it reflects the incompetence of polticians to guide a nation.

Mon, 05/07/2012 - 21:11 | 2405274 knukles
knukles's picture

Except them thats be off budget, not included in the "public figure", State and Local Unmarketable Government Securities (SLUGS), whatever's been put in some fucking lock box, guarantees, contingent guarantees, non budgeted obligations (pension, etc.), credits due and recievables aged beyond recogmnition, gold not accounted for and whateverelseIcan'tevenrememberrightnow for a start

Mon, 05/07/2012 - 21:13 | 2405277 Shizzmoney
Shizzmoney's picture

Refunds were lower, in large part, because some that ordinarily would have been recorded in April were made in prior months.

That, and I *need* that check in my hands, as soon as possible.

Mon, 05/07/2012 - 21:16 | 2405279 max2205
max2205's picture

MAN U FACTORED FOR THE E LECTION

Mon, 05/07/2012 - 21:40 | 2405312 socalbeach
socalbeach's picture

I wonder how much the Treasury has saved in interest payments so far this fiscal year due to Operation Twist ?

Mon, 05/07/2012 - 21:44 | 2405318 dolph9
dolph9's picture

I'm willing to give our corrupt, fascist, socialist government the benefit of the doubt on this one.  They may have cut in some areas and fleeced some companies or peons somewhere.

Still, doesn't make a difference.  It's all smoke and mirrors in the end.

Mon, 05/07/2012 - 21:51 | 2405329 djsmps
djsmps's picture

This will be a new Obama chest-pounding campaign ad and then it will go viral on Facebook. At some point during the ad, Obama will remind us that he killed Osama bin Laden and vows that Kony will die before the election.

Mon, 05/07/2012 - 22:03 | 2405344 El Gordo
El Gordo's picture

I haven't paid my rent for May yet, so I'm also running a surplus this month.  I typically pay on the 30th of the month, so I wouldn't be surprised if my surplus returns to a deficit when I have to pay 2 months worth soon.  Timing is everything.

Mon, 05/07/2012 - 22:07 | 2405350 lolmao500
lolmao500's picture

The CBO... lol...

In other uh oh news...

http://www.haaretz.com/news/national/in-surprise-move-netanyahu-mofaz-ag...
In surprise move, Netanyahu, Mofaz agree to form unity government, cancel early elections

PM, opposition leader reach dramatic late-night agreement to form national unity government, in which Kadima head Mofaz expected to be appointed deputy prime minister.

Under the agreement, Kadima will join Netanyahu's government and commit to supporting its policies through the end of its term in late 2013. Mofaz is expected to be appointed deputy prime minister, as well as minister without portfolio.

In exchange, Netanyahu's government will support Kadima's proposal to replace the Tal Law, which enables ultra-Orthodox youth to defer national service.

War it is.

Mon, 05/07/2012 - 22:29 | 2405380 hedgehog9999
hedgehog9999's picture

I wonder if the decreased intensity of the Iraqi and Afghan wars is also "contributing" to this "surplus"

while that may be true, the returning staff from those wars still needs to get paid in one way or another + who knows what other expenses DOD is now incurring to replace equipment and materiel  left stranded in those countrie, etc.

I think this is a sign of more creative accounting over the next few months until the election, it should indeed create a set of optics that even deficits are improving somewhat..... what a laugh.....

Mon, 05/07/2012 - 22:38 | 2405396 RaymondKHessel
RaymondKHessel's picture

Roth IRA conversion taxes.

Mon, 05/07/2012 - 23:12 | 2405445 Tijuana Donkey Show
Tijuana Donkey Show's picture

Serfs using the robotraders to cask out their (4)(3)(2)(1)K's to keep some high fructose corn syrup on the table, and some placebo's in the cabinet. Also, if a bank writes off a mortgage or credit card to you, that's income, and the Feds get taxes on every dollar forgiven (Even fees and interest), so that bounce is from the middle class taking that last big huff before they die and shit themselves. The kicker? That when they force a writedown, they get one last tax on the debt before you start over. The FEMA camps are to be debter serf prisons, where we make Ipads for the Chinese................. with no high roofs.

Tue, 05/08/2012 - 02:48 | 2405638 Hobbleknee
Hobbleknee's picture

What was their goal for the "budget cuts"?  400 billion a year for 10 years? Ha!

Tue, 05/08/2012 - 06:40 | 2405769 mailll
mailll's picture

Budget cuts? We don't need no stinken budget cuts!

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