July Federal Budget Results, and Previewing the Year-end

The July 2007 Monthly Treasury Statement results are in:

I predicted (second item at link) that revenues would come in 5%-7% ahead of last year, and the result was close to the high end. While outlays were also up about 7%, it could have been worse, because last year’s spending number was the lowest in the entire fiscal year.

Yours truly’s prediction that the budget deficit might come in at $150 billion or lower appears to be a realistic possibility. That would be roughly 40% below last year’s $248 billion — an achievement that fulfilled the Administration’s 2003 promise to cut the budget deficit in half by the time the president leaves office three years early. August and September of 2006 had a net surplus of $8.6 billion.

There is good reason to believe that the surplus in the final two months of fiscal 2007 will be at least $7.3 billion, which is what it will take to slide under $150 billion.

The final two months’ surplus could plausibly end up much higher than that $7.3 billion. It will largely depend on the estimated taxes paid on September 15 by those who don’t have their taxes withheld — corporations, the self-employed, contractors, many retirees, and others. So far this year fiscal year, non-withheld tax payments, especially by individuals, have ballooned to $400.6 billion through August 8 (in Table II of the report), up 12.8% from $355.2 billion at of the same date last year.

The other wild card is whether the final two months’ outlays only go up by a few percentage points from last year. It may be that the other party in control of Congress could cause spending to spike by encouraging sympathetic bureaucrats to spend any budgeted amounts they haven’t yet used up.

_______________________________________

Friday Snark: Can’t resist adding this — This means, as Rush said on his broadcast on August 3, that the only place in Washington where revenues are going down is at The Washington Post.