Happy New Fiscal Year!

After narrowing the gap between government income and expenditures in fiscal year 2013, the new fiscal year is off to a good start. According to the monthly release from the Treasury Department, the nation began the year with a 23.7 percent smaller deficit than 12 months ago. With any luck, the shortfall will continue shrinking as the year wears on.

The smaller deficit was created by improvements in both components of the equation. First, government outlays fell from a year ago. Spending dropped 4.5 percent from last October to $2.91 billion. Government receipts were higher. The $1.99 billion in receipts (mostly taxes) is 7.9 percent higher than October 2012. While income taxes are the largest portion of the government’s inflows, they were lower than this time last year. However, taxes paid by corporations were higher, as was the amount of money collected for retirement receipts and social insurance.

Assuming the economy continues to grind forward, the beltway will be sent additional revenue from the growing aggregate income in America. The spending side of the equation is much less certain. Congress’ infighting has only managed to postpone any real solution. The next attempt at an actual budget will be at the beginning of the new calendar year when the temporary resolution expires (January 15th), just weeks before the debt ceiling is expected to be reached (February 7th). Happy New Year! (by C. Cox)