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CBO Estimates Deficit Dropped $200 Billion in 2012

October 12, 2012—In its Monthly Budget Review released Oct. 5, the Congressional Budget Office (CBO) estimates the federal budget deficit for FY 2012 was $1.09 trillion.  This is $207 billion lower than the FY 2011 deficit and $38 billion less than CBO projected in August.

CBO notes that at 7.0 percent of gross domestic product, the FY 2012 deficit was down from 8.7 percent in FY 2011 and 9.0 percent in FY 2010 but greater than in any year between 1947 and 2008.

A portion of the decrease in the deficit is due to the shift of some payments from FY 2012 into FY 2011 (that is, from October 2011 to September 2011, because October 1 fell on a weekend).  Without this shift, CBO estimates the FY 2012 deficit would have been about $30 billion higher.

CBO reports that spending fell in FY 2012 across all major categories except Social Security and Medicare. Social Security outlays rose by $42 billion (6 percent) in FY 2012, somewhat more than in recent years. Medicare spending rose by $15 billion (3 percent), slightly less than in the previous two years.

Medicaid spending decreased by $24 billion (9 percent), which CBO attributes to the expiration of legislated increases in the federal share of the program’s costs in July 2011.

CBO’s deficit estimate is based on data from the Daily Treasury Statements; the Treasury Department will report the actual deficit for FY 2012 later in October.


Dave Moore
Senior Director, Government Relations
Telephone: 202-828-0559



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Telephone: 202-903-0806