FY 2010 Deficit

The final figures are out from the Obama Administration on the yearly budget deficit, which came in as the second highest all time, after last year. The final figure was just under $1.3 trillion.  Here are all the nitty gritty details courtesy of the Treasury Department.
=

Joint Statement of Timothy Geithner,

Secretary of the Treasury, and Jeffrey Zients, Acting Director of the Office of

Management and Budget, on Budget Results for Fiscal Year 2010

WASHINGTON,

D.C.

- U.S. Treasury Secretary Tim Geithner and Office of Management and Budget

(OMB) Acting Director Jeffrey Zients today released details of the final fiscal

year (FY) 2010 budget results. In making the announcement, Geithner and Zients

underscored the Administration's commitment to getting Federal finances back on

a sustainable path and ending emergency programs that proved instrumental to

reviving growth while beginning the process of bringing down our deficit. As a

result, our fiscal outlook, which remains challenging, has improved over the

past year.

Due to careful

stewardship of the emergency programs, their effect on the deficit was much

smaller than previously estimated. The Troubled Asset Relief Program (TARP) had

outlays of just $9.0 billion in FY 2010, which was $25.9 billion or 74 percent

below previous estimates from July 2010.  Aid to Fannie Mae and Freddie

Mac was $52.6 billion in FY 2010 - $16.4 billion or 24 percent less than the

most recent forecast. This played a large part in reducing the deficit, which

as a percentage of gross domestic product (GDP) fell to 8.9 percent, down from

10.0 percent of GDP in FY 2009. This improvement - 1.1 percent of GDP - was the

most rapid one-year improvement since FY 1987.

"By

carefully managing the emergency initiatives to stop the financial panic and by

accelerating our exit from those investments, we have significantly lowered the

cost to taxpayers, bringing the costs of the financial rescue down by more than

$240 billion this year.  However, we still have a long way to go to repair

the damage to the economy and address the long-term deficits caused by the

crisis," Secretary Geithner explained.

"Thanks

in large part to the tough decisions this Administration made over the past two

years, the economy is recovering and we're spurring economic growth and job

creation. Because the President believes that we must also work to get back on

a fiscally sustainable path, our FY 2012 Budget policy process will continue to

enforce the three-year, non-security discretionary spending freeze and continue

our efforts to put the nation on firm fiscal footing," Acting Director

Zients stated. 

Summary of

Fiscal Year 2010 Budget Results

Year-end data

from the September 2010 Monthly Treasury Statement of Receipts and Outlays of

the United States Government show that the deficit for FY 2010 was $1.294

trillion, $122 billion or nine percent less than in FY 2009, and $177 billion

or 12 percent less than estimated in the July 2010 Mid-Session Review of the FY

2011 Budget (MSR). The deficit was also $261 billion or 17 percent less than

the estimate in the President's FY 2011 Budget submitted to Congress in

February 2010. As a percentage of GDP, the deficit fell to 8.9 percent, down

from 10.0 percent of GDP in FY 2009.

Table 1. Total Receipts, Outlays, and

Deficit (in billions of dollars)

 

Receipts

Outlays

Deficit

FY 2009

Actual

2,104

3,520

-1,416

   

Percentage of GDP

14.9%

25.0%

10.0%

FY 2010

Estimates

    2011

Budget

2,165

3,721

-1,556

    2011

Mid-Session Review

2,132

3,603

-1,471

FY 2010

Actual

2,162

3,456

-1,294

   

Percentage of GDP

14.9%

23.8%

8.9%

The decline

in the deficit from last year was due to a combination of higher receipts and

lower outlays. Government receipts totaled $2.162 trillion in FY 2010. Receipts

were $57 billion higher than in FY 2009, an increase of 2.7 percent. This

turnaround in receipts, after two years of decline, was due to higher

corporation income tax receipts and receipts from the Federal Reserve. These

increases were partially offset by a decline in individual income and payroll

tax receipts. As a percentage of GDP, receipts remained unchanged at 14.9

percent.

Outlays for

FY 2010 were $64 billion less than in FY 2009, a decrease of 1.8 percent. As a

percentage of GDP, total outlays shrank from 25.0 percent in FY 2009 to 23.8

percent in FY 2010. This reduction in outlays - of 1.2 percent of GDP - was the

fastest one-year reduction since FY 1984. Spending for three large programs

related to the financial crisis declined by $242 billion, year over year, from

$272 billion in FY 2009 to $30 billion in FY 2010: the TARP; assistance to

Fannie Mae and Freddie Mac; and deposit insurance activities of the Federal

Deposit Insurance Corporation and the National Credit Union Administration.

Excluding the $242 billion decline in outlays for these three programs, outlays

for the remaining government agencies and programs increased by a net $178

billion or 5.5 percent. Spending in FY 2010 increased for major entitlement

programs such as Social Security, Medicare and Medicaid, and unemployment

benefits.

At $1.294

trillion, the FY 2010 deficit was $177 billion less than projected in the

MSR.  Receipts were $30 billion above the MSR estimate, while outlays were

$147 billion below the MSR estimate. Although lower than expected, the FY 2010

deficit remained elevated as a result of the severe economic recession, high

unemployment, and the financial crisis that were inherited by the current

Administration. In order to shore up the economy, the Administration put in

place temporary economic stabilization and recovery efforts, including the

American Recovery and Reinvestment Act (Recovery Act), which provided much

needed tax relief and jobs. The Administration also continued emergency

economic stabilization efforts including the TARP, initiated by the previous

administration. The TARP has proved to be effective and will cost far less than

originally expected. In part because of these measures, the economy began to

grow again in the second half of 2009, and the FY 2010 budget results reflect

improving economic conditions. 

Federal

borrowing from the public, net of financial assets, increased by $1.294

trillion during FY 2010 to $8.004 trillion, or 55.1 percent of GDP. [1]

Fiscal

Year 2010 Receipts

Total

receipts for FY 2010 were $2.162 trillion, $30 billion higher than the MSR

estimate of $2.132 trillion. Higher-than-expected collections of individual

income taxes, corporation income taxes, and miscellaneous receipts accounted

for most of the net increase in receipts relative to the MSR. Table 2 displays

actual receipts and estimates from the MSR by source.

·        

Individual income taxes were $899 billion, $14 billion higher than the

MSR estimate.  Delay in enactment of the Administration's proposal to

extend bonus depreciation for certain property accounted for $4 billion of the

increase in individual income tax receipts relative to the MSR estimate.

Higher-than-estimated withholding, attributable primarily to

higher-than-anticipated wages, accounted for most of the remaining increase in

individual income tax receipts relative to the MSR

estimate.      

·        

Corporation income taxes were $191 billion, $11 billion higher than the

MSR estimate.  Delay in enactment of the Administration's proposal to

extend bonus depreciation for certain property increased corporation income tax

payments $5 billion relative to the MSR. The remaining increase was

attributable to increased corporation income tax payments and reduced refunds,

attributable to higher-than-expected corporate profits.    

·        

Social insurance and retirement receipts were $865 billion, the same as

the MSR estimate, due to small offsetting differences among the sources of this

category of receipts.            

·        

Excise taxes were $67 billion, $3 billion lower than the MSR estimate of

$70 billion.  This decline was attributable to lower-than-expected demand

for taxed goods and higher-than-expected refunds.     

·        

Estate and gift taxes were $19 billion, the same as the MSR

estimate. 

·        

Customs duties were $25 billion, $2 billion higher than the MSR estimate

of $23 billion.  This increase was attributable to higher-than-expected

imports of taxed goods.

·        

Miscellaneous receipts were $96 billion, $5 billion higher than the MSR

estimate.  Higher-than-expected deposits of earnings by the Federal

Reserve System, attributable to higher-than-expected returns on its investment

portfolio and higher-than-expected earnings on its foreign currency holdings,

accounted for $3 billion of the increase in miscellaneous receipts relative to

the MSR estimate.

·        

The MSR included an allowance for jobs initiatives, which reduced

expected receipts by $1 billion. Delay in enactment of a job creation package

increased FY 2010 receipts $1 billion relative to the MSR.       

Fiscal

Year 2010 Outlays

Total outlays

were $3.456 trillion for FY 2010, which was $147 billion below the MSR

estimate. Outlays were lower than estimated in the MSR for a number of

agencies. The difference from the MSR estimate was $10 billion or more for the

Departments of Agriculture, Defense, and Treasury; the Social Security

Administration; and the Federal Deposit Insurance Corporation. The difference

was $5 billion or more for the Departments of Health and Human Services,

Homeland Security, Labor, Transportation, and Veterans Affairs. Within the

Department of Treasury, TARP outlays were $26 billion less than projected in

the MSR and outlays for assistance to the Government-sponsored enterprises,

Fannie Mae and Freddie Mac, were $16 billion less than the MSR estimate.

Table 3

displays actual outlays by agency and major program as well as estimates from

the Budget and the MSR. The largest changes in outlays from the MSR were in the

following areas:

  • Department of Agriculture -- Outlays for the Department of Agriculture were $129.5 billion, $10.8 billion below the MSR estimate. Major differences from MSR projections include:
  • Department of Commerce -- Outlays for the Department of Commerce were $13.2 billion, $2.7 billion less than the MSR estimate. Three-fifths of the difference is due to favorable performance of the 2010 Decennial Census, including higher-than-expected workforce productivity and a higher-than-expected Census questionnaire mail-back response rate that reduced the need for costly non-response follow-up operations, resulting in no need to tap contingency funds set aside for disasters or major operational failures. 
  • Department of Defense -- Outlays for the Department of Defense (DoD) were $666.7 billion, $20.1 billion less than estimated in the MSR. Nearly half of the total difference was due to slower-than-expected outlays in the Department's procurement accounts, with much of the shortfall resulting from late passage of the FY 2010 Supplemental Appropriations Act. For example, DoD spent $1.4 billion less than expected for Air Force aircraft (especially C-130 Hercules transport aircraft), $1.8 billion less than projected for the Afghanistan Security Forces Fund, and $1.0 billion less than projected for Mine Resistant Ambush Protected Vehicles purchases. Another example of lower-than-projected outlays was in the DoD Working Capital funds, which were $2.5 billion lower than expected due to higher-than-projected sales and lower-than-anticipated fuel costs.    
  • Department of Education -- Outlays for the Department of Education were $92.9 billion in FY 2010, $4.5 billion less than the MSR estimate. This difference was largely due to outlays from the State Fiscal Stabilization Fund, which were $3.6 billion lower than estimated in the MSR. A variety of smaller Department of Education programs made up the remainder of the difference.
  • Department of Energy -- Outlays for the Department of Energy were $30.7 billion, $1.7 billion lower than the MSR estimate. Outlays for the Energy Efficiency and Renewable Energy account were $880 million below MSR estimates. Lower outlays for Fossil Energy, $193 million less than the MSR estimate, and Science, $219 million less than the MSR estimate, were due primarily to later than assumed awarding of funds. Outlays for the National Nuclear Security Administration were $823 million less than estimated in the MSR because of lags in contractors billing the Department of Energy for costs incurred at the end of the year.
  • Department of Health and Human Services -- Outlays for the Department of Health and Human Services (HHS) were $854.1 billion in FY 2010, $9.8 billion below the MSR estimate. Medicare gross outlays were $525.6 billion, $7.3 billion or 1.3 percent less than MSR estimates. This difference was largely due to lower-than-expected Part B gross expenditures, which were $7.8 billion (3.5 percent) lower than projected in the MSR. The lower Part B outlays were partly due to lower-than-expected volume growth for Part B services. Part A expenditures finished FY 2010 about $600 million (0.3 percent) above MSR estimates, while Part D spending was about $300 million (0.6 percent) higher than projected. Actual year-end Medicaid outlays were $1.7 billion (0.6 percent) lower than MSR estimates. While year-end financial and enrollment data are still being finalized, the difference between the estimated and actual Medicaid spending growth appears to be primarily the result of lower-than-projected administrative spending, likely due to stronger efforts by States to control program spending. Actual year-end Children's Health Insurance Program (CHIP) outlays were $1.0 billion (11.5 percent) lower than MSR estimates. The difference between the estimated and actual CHIP spending was due to lower-than-projected State spending for health coverage, compared with State estimates received during development of the MSR.  While actual outlays were less than MSR estimates, CHIP spending still increased by $341 million (4.5 percent) over FY 2009. 
  • Department of Homeland Security -- Outlays for the Department of Homeland Security were $44.5 billion, $7.3 billion less than the MSR estimate.  Approximately $6 billion of this difference was due to the later-than-expected passage of the FY 2010 Supplemental Appropriations Act, along with enactment in August of the FY 2010 Emergency Border Security Supplemental Appropriations Act. Due to the late passage of these bills, the Department was required to limit spending from the Federal Emergency Management Agency's Disaster Relief Fund (DRF) to immediate needs or emergency funding only.  Also, the mild 2010 hurricane season reduced the need to spend from the DRF. In addition, Customs and Border Protection outlays were lower and funding provided in the border supplemental was carried over into FY 2011. Outlays for the Transportation Security Administration (TSA) were $720 million below the MSR estimate. This difference was attributable to slower-than-expected obligation of program funding for the TSA explosives detection systems and checkpoint programs, due in part to additional airport security projects not being ready for funding by the end of FY 2010.
  • Department of Housing and Urban Development -- Outlays for the Department of Housing and Urban Development were $60.1 billion in FY 2010, $1.0 billion below the MSR estimate. More than half of this difference ($512 million) was due to lower-than-expected spending in the Community Development Fund because of slower spending from the $6.1 billion supplemental provided for 2008 disaster recovery (P.L. 110-329) and $2 billion provided for Neighborhood Stabilization Program II (P.L. 111-5). Outlays for disaster recovery activities are often uneven. The remainder of the difference was due to higher-than-expected interest earnings by the Government National Mortgage Association and higher-than-anticipated loan volume and recoveries from defaulted loans in the FHA General and Special Risk Insurance programs.  
  • Department of Interior --Outlays for the Department of the Interior were $13.2 billion, $1.0 billion more than estimated in the MSR. The MSR estimate included $2.0 billion in receipts from the Department of the Treasury relating to the Cobell v. Salazar settlement, which has not yet been approved by Congress. This difference was offset in Treasury outlays. Offsetting receipts from Mineral Leasing, Public Lands were $256 million higher and Reclamation Fund, Royalties on Natural Resources had receipts that were $184 million higher than MSR estimates.
  • Department of Labor -- Outlays for the Department of Labor were $172.9 billion in FY 2010, $7.8 billion less than the MSR estimate. Most of the difference was due to lower-than-expected spending on unemployment compensation benefits, including Emergency Unemployment Compensation. The insured unemployment rate has been lower than projected at MSR, which results in lower benefit outlaysLower-than-anticipated outlays at the Pension Benefit Guaranty Corporation accounted for about $1 billion of the difference, primarily due to higher PBGC interest income than estimated in the MSR.
  • Department of State -- Outlays for the Department of State were $23.8 billion in FY 2010, $2.0 billion below the MSR estimate. Most of the difference was due to the Global Health and Child Survival account, outlays for which were $1.9 billion below the MSR estimate. Changes in State's operational planning process delayed obligations and transfers in this account by 3 months, thus delaying the typical fourth-quarter surge in outlays to purchase commodities for the President's Emergency Plan for AIDS Relief.
  • Department of Transportation -- Outlays for the Department of Transportation were $77.8 billion, $7.7 billion lower than projected in the MSR. The surface transportation programs, which were $6.0 billion below MSR projections, were affected by uncertainty due to numerous short-term program authorization extensions. The largest difference was in the Federal Highway Administration, where Federal Aid Highway program outlays were $4.4 billion below the MSR projection. In addition, Federal Transit Administration program outlays were $1.4 billion below expected levels. For these two programs, short-term authorizations limited States' ability to obligate funds in a timely manner. Further, other program outlays were lower because States were focused on Recovery Act projects and using those funds before they expired.
  • Department of the Treasury -- Outlays for the Department of Treasury totaled $444.4 billion, $49.0 billion lower than the MSR estimate. Major differences from the MSR estimate include the following:
  • Department of Veterans Affairs -- Outlays for the Department of Veterans Affairs were $108.3 billion in FY 2010, $6.9 billion less than the MSR estimate. The Compensation and Pensions program accounted for nearly $4.9 billion of the difference. Of the $4.9 billion, $4.0 billion represents supplemental funds provided for new Agent Orange claims by P.L. 111-212 that were expected to be obligated before the end of the fiscal year. However, publication of the final regulation establishing the new Agent Orange presumptions took longer than originally expected. Because of the mandatory 60-day waiting period required under the Congressional Review Act, none of these funds will be obligated until the end of October 2010. Most of the remaining $0.9 billion in lower Compensation and Pensions outlays resulted from a decline in retroactive benefit payments from the levels observed earlier in the fiscal year, along with fewer-than-expected original claims for Disability Compensation. In addition, $0.5 billion of the lower outlays occurred due to the Readjustment Benefits program. Nearly 150,000 more service members and veterans than expected chose to use the less generous, but somewhat more flexible, Chapter 30 education benefits rather than convert to Chapter 33 education benefits. An additional $0.6 billion reduction in outlays occurred in the Information Technology account, attributable to the implementation of the Project Management Accountability System, which resulted in unexpected development project delays and lower-than-expected staffing levels.
  • International Assistance Programs -- Outlays for International Assistance Programs were $20.0 billion in FY 2010, $1.3 billion below the MSR estimate. Outlays for the Millennium Challenge Corporation were $1.1 billion lower than projected in the MSR due to lower-than-expected disbursements. In addition, outlays for the Agency for International Development (USAID) were $0.8 billion below the MSR estimate due primarily to lower-than-expected outlays in USAID's Operating Expenses account for its capital expansion program as well as late-fiscal-year reprogramming that further delayed outlays. The third major factor was Economic Support Fund outlays, which were $1.3 billion less than the MSR estimate due to longer-than-usual consultation with Congress on use of economic assistance funds in Afghanistan and Pakistan. Partially offsetting these reduced outlays, net outlays relating to Foreign Military Sales (FMS) were $2.1 billion higher than the MSR estimate due to higher spending on FMS contracts and lower-than-anticipated receipts.
  • Office of Personnel Management -- The Office of Personnel Management had outlays of $69.9 billion in FY 2010, $1.6 billion less than estimated in the MSR. The difference was almost entirely due to net outlays for the Employee and Retired Employee Health Benefits Funds, which were $1.5 billion lower than expected, due to lower-than-anticipated claims presented by experience-rated carriers.
  • Social Security Administration -- Outlays for the Social Security Administration (SSA) were $754.2 billion in FY 2010, $13.9 billion less than the MSR estimate. Nearly all of this difference arose because the MSR proposal for a second round of $250 Economic Recovery Payments has not been enacted. The MSR estimated that this proposal would raise FY 2010 outlays for SSA by $12.5 billion.
  • Federal Deposit Insurance Corporation -- The Federal Deposit Insurance Corporation (FDIC) had actual net outlays of -$20.6 billion, $13.6 billion higher than the MSR estimate of -$34.2 billion. The difference was largely driven by lower-than-anticipated proceeds from the liquidation of banks held in FDIC receivership. This difference was partially offset by lower-than-expected payments related to FDIC's guarantee of non-interest bearing transaction accounts.
  • National Credit Union Administration -- Net outlays for the National Credit Union Administration (NCUA) were -$11.4 billion, a difference of $1.4 billion from the MSR estimate of -$10.0 billion. Unanticipated borrowing to improve liquidity in the Temporary Corporate Credit Union Stabilization Fund led to a $1 billion assessment on Federally insured credit unions. The assessment was not included in the MSR estimate and primarily accounts for the difference.
  • Postal Service -- The United States Postal Service (USPS) had actual net outlays of $4.8 billion, $1.7 billion lower than the MSR estimate. The majority of the difference was due to lower-than-anticipated USPS expenses, allowing USPS to borrow $1.2 billion less from the Federal Financing Bank at the Department of the Treasury in FY 2010 than was expected.  
  • Railroad Retirement Board -- FY 2010 outlays for the Railroad Retirement Board (RRB) of $5.1 billion were $1.1 billion lower than estimated in the MSR. This was the result of higher-than-expected market gains on non-Federal securities held by the RRB. The Railroad Retirement and Survivors Improvement Act of 2001 permitted assets of Tier II of the Railroad Retirement program to be invested in private equities. Net returns for FY 2010 on non-Federal securities, including unrealized gains and losses, were $0.9 billion higher than estimated in the MSR.
  • Undistributed Offsetting Receipts -- Undistributed offsetting receipts were $267.9 billion in FY 2010, $1.8 billion lower (higher net outlays) than the MSR estimate. Interest received by trust funds was $185.8 billion, $4.0 billion lower than the MSR estimate (higher net outlays), due largely to lower-than-estimated interest earnings for the Civil Service Retirement and Disability Fund (CSRDF). Partially offsetting these higher net outlays were receipts of Federal employer payments into the CSRDF, which were $1.5 billion more than projected in the MSR.

The final figures are out from the Obama Administration on the yearly budget deficit, which came in as the second highest all time, after last year. The final figure was just under $1.3 trillion.  Here are all the nitty gritty details courtesy of the Treasury Department.= Joint Statement of Treasury ...

About the Author