The Congressional Budget Office (CBO) estimates that the final FY2012 federal budget deficit was almost $1.1 trillion, slightly more than $200 million lower than FY2011. The decline in the deficit resulted from a decrease in government spending (-$59 billion) and higher revenues (+$148 billion).
CBO estimates are based on Daily Treasury Statements produced by the Treasury Department.
When measured as a percent of Gross Domestic Product (GDP), the deficit dropped to 7 percent from 8.7 percent in FY2011 and 9 percent in FY2010. Even so, the FY 2012 deficit as a share of GDP was higher than that recorded each year from 1947 through 2008.
According to CBO, two-thirds of the revenue growth in FY2012 was due primarily to rising corporate income tax receipts (+$61 billion) and higher individual income tax receipts (+$37 billion). CBO asserts that growth in corporate receipts stems from recent changes in tax rules. Increases in withholding (+$24 billion) accounted for almost two-thirds of the increase in individual income tax revenue. Receipts from social insurance taxes (+32 billion) and other sources (+18 billion), such as estate, excise, and gift tax receipts make up the remaining increase.
CBO analysis determined that federal spending declined in FY2012 from the previous year for all major categories of spending except Social Security, which rose by about 6 percent (+$42 billion). DoD outlays declined by $27 billion, somewhat due to lower spending in Afghanistan. Overall non-DoD spending also decreased in FY2012, although some agencies (e.g., VA, State, Homeland Security, and EPA) recorded spending increases, according to CBO.
Unemployment benefits decreased by $30 billion (as fewer people collected benefits in FY2012) from the previous year and Medicaid outlays declined because the federal share of program costs expired in mid-2011.
The Treasury Department will report the official final FY2012 budget deficit by the end of October.