Deficit through May was $627 billion, CBO says

The Congressional Budget Office on Friday estimated that the federal budget deficit for the first eight months of fiscal 2013 was $627 billion. 

That’s a drop of $217 billion from the deficit at this point last year, and is almost entirely due to an increase in tax revenue of $236 billion. Overall spending actually increased slightly, but taking a calendar quirk into account it has decreased about 2 percent, the CBO estimated.

{mosads}With the deficit set to fall below $1 trillion for the first time under President Obama this year, Washington has felt less urgency in trying to come up with a deficit bargain to reduce the deficit. 

The CBO continues to say that the total deficit for this year will be $642 billion once government backed mortgage lenders deliver huge payments to the Treasury later this year.

On the revenue side, payroll taxes are up $118 billion or 10 percent as the two-year payroll tax holiday was allowed to expire in January and more people are employed. Corporate taxes are up $24 billion or 20 percent for the year.

On the spending side, military spending is down 6.4 percent and unemployment insurance is down 24.5 percent, the CBO said.   

But these spending cuts are paired with increases for the major entitlements. Social Security increased 5.6 percent and Medicare was up 4.2 percent.

The aging population and rising healthcare costs are sapping the trust funds of the entitlement programs. Last week, the government revealed that Social Security is on track to be unable to pay full benefits by 2033 and Medicare will be insolvent by 2026.

Crop insurance payments and federal disaster aid is also on the rise, even as spending on energy programs and international assistance has recorded large drops, the CBO said.