CBO estimates that the federal budget deficit was about $1.30 trillion in fiscal year 2011, approximately the same dollar amount as the shortfall recorded in 2010. The 2011 deficit was equal to 8.6 percent of gross domestic product, CBO estimates, down from 8.9 percent in 2010 and 10.0 percent in 2009, but greater than in any other year since 1945. The estimated 2011 total reflects the shift of some payments from fiscal year 2012 into fiscal year 2011 (that is, from October to September, because October 1 fell on a weekend); without that shift, the deficit in 2011 would have been $1.27 trillion. CBO’s deficit estimate is based on data from the Daily Treasury Statements; the Treasury Department will report the actual deficit for fiscal year 2011 later this month.
The deficit in September was $64 billion, CBO estimates, $29 billion greater than the shortfall recorded a year ago. Without the shift to September of certain payments that would ordinarily be made in October, the deficit in September would have been $2 billion lower than it was in the same month in 2010.
Net interest on the public debt grew the most, rising by almost 17 percent ($38 billion) above the outlays recorded in 2010, primarily because of the large increase in the government’s debt during the past year. In the other direction, spending for unemployment benefits fell by 24 percent ($39 billion) in 2011 because fewer claims were filed and a provision that boosted recipients’ benefits by $25 per week expired. Net payments to Fannie Mae and Freddie Mac also fell, from $40 billion in 2010 to $5 billion in 2011. Spending for education, commerce, housing, and space programs declined as well.
Defense spending increased by about 1 percent in 2011, after rising by an average of 7 percent per year over the 2006–2010 period. Medicaid outlays increased by just 1 percent this year, in part because the federal government’s share of the program’s costs declined, as previously legislated increases in that share expired. (In contrast, Medicaid spending grew by almost 9 percent in 2010.) Medicare and Social Security outlays rose by about 4 percent each this year, slightly less than they rose last year.