At Halftime, The Score is 829 to 777

CBO's latest Monthly Budget Review for March gives us a look at how the federal budget looks compared to last year halfway through the fiscal year. This year's deficit through six months is $777 billion, compared to $829 billion through the same period last year. The smaller deficit is the result of revenue being $46 billion higher and outlays actually being $7 billion lower compared to FY 2011.

A few factors have contributed to the changes from last year. Countercyclical spending measures that have been elevated due to the recession (both from the stimulus and automatic stabilizers) have either gone away or diminished somewhat. Federal Medicaid spending is down by 16 percent due to increased aid to states through the program expiring at the end of June last year. Defense and discretionary spending overall is down due to spending reductions from the Budget Control Act. Unemployment insurance spending has gone down as the unemployment rate has dropped and some people have used up their maximum weeks on the program. Meanwhile, categories such as Medicare, Social Security, interest, and financial stabilization efforts (TARP and GSE support) have gone up.

Revenue has creeped up as more people have become employed during this fiscal year, pushing up income and payroll tax revenue. Corporate revenue is way up from last year, possibly due to fewer companies taking advantage of the expensing provision that is in effect for 2011 and 2012, or because businesses have fewer losses to carry over from previous years. Overall, revenue is up by 4.5 percent.

In March, CBO estimated that the deficit this year would be $1.17 trillion, about $130 billion lower than last year. Judging by the halftime score for FY 2012, we appear to be on our way to hitting that mark.