The CBO’s Monthly Budget Review published January 6 (available at www.cbo.gov) provided some good news on the issue of tax receipts, which grew strongly in December. Looking solely at December figures, the government ran a surplus. However, looking at the more reliable indicator of the first quarter results (Oct-Dec), here are the figures for FY 2006 (preliminary) as compared with FY 2005:
FY 2005 Prelim 2006 Increase
Receipts $487B $531B 9%
Outlays $605B $649B 7%
As for the source of those receipts, gains in income and employment taxes on individuals contributed about 6 percent of the increase, but the real growth game in corporate income taxes, which were up 26.3 percent over the FY 2005 figures. The report indicates that this growth would have been even higher – perhaps up to 35 percent – if some corporate payments were not deferred on account of special legislation passed after the hurricanes.
This is good news on the economic front.
As for outlays, the rate of growth is not as encouraging. Hurricane related spending of $15 billion accounted for some of the increase. Ignoring this, program spending is up about 6 percent over the prior year. Interest costs on the national debt are also up during the first quarter – from 43 to 58 billion, an increase of 33%. This could add up to real money as deficits grow or if interest rates should increase in the future.