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Spending Up, Receipts Way Up.

The U.S. Treasury Department's Monthly Treasury Statement for August 2005 (.pdf) is out.

From October 2004 through August of 2005, federal spending in the United States rose 6.8%, relative to the same time frame last year.

Meanwhile, revenues coming into the government from October 2004 through August of 2005 rose by 13.7%, relative to the same time frame last year.

The good news: the growth of government receipts is far outpacing the growth of government spending.

The bad news: to begin with, government spending was already much larger than government receipts.

Thus, we're still running a deficit. Just not as large as projected.

Through August 2004, the annual federal budget deficit was 437,455,000,000 dollars.

Through August 2005, the annual federal budget deficit is 352,562,000,000 dollars. This marks a decline of 19.4% from last year. The gap between government outlays and government revenues is shrinking.

If you are a bit confused, just understand that fiscal years (FYs) begin in October of the previous year and end in September. Right now, we are at the tail end of Fiscal Year (FY) 2005. Last September, the Treasury ran a surplus, reducing the annual deficit from 437 billion to 412 billion.

This year, Congress and President Bush have already approved tens of billions of relief aid for Hurricane Katrina, which will complicate the progress of cutting down the deficit. But it remains important to note that tax relief has grown the American economy, which has generated more tax revenues, even at a lower rate. This has allowed us to cut down the deficit, although spending growth remains far too high.

And speaking of spending growth, it has grown 144 billion dollars this year over last. Here are the 12 most significant items causing growth in federal spending this year over last (notice how much of it is entitlements and other non-discretionary spending):

1. National Defense: $30.1 billion more than last year.
2. Social Security: $25.3 billion more than last year.
3. Medicare: $23.0 billion more than last year.
4. Net Interest: $18.1 billion more than last year.
5. Education: $11.9 billion more than last year.
6. Health: $9.7 billion more than last year.
7. Agriculture: $9.5 billion more than last year.
8. Income Security: $9.3 billion more than last year.
9. International Affairs: $8.0 billion more than last year.
10. Veterans Benefits & Services: $7.5 billion more than last year.
11. Community & Regional Development: $6.4 billion more than last year.
12. Transportation: $2.1 billion more than last year.
13. Energy: $1.2 billion more than last year.
14. Science, Space, Technology: $1 billion more than last year.

Spending decreased in some areas, too:

1. Administration of Justice: $6.1 billion less than last year.
2. General Government: $5.3 billion less than last year.
3. Natural Resources & Environment: $2.9 billion less than last year.
4. Commerce & Housing Credit: $0.5 billion less than last year.

This information ought to reinforce just how important it is to reform entitlements such as Social Security and Medicare. This data also ought to underline the importance of pro-growth tax reform, which will help us grow our economy, which will ultimately spur greater receipts of tax revenues.

Posted by Will Franklin · 13 September 2005 03:13 PM

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