Update for October 29, 1996.

Budget Deficit at $107.3 billion for FY 1996


Preliminary budget estimates by the Department of Treasury for Fiscal Year 1996, which ended on September 30, 1996, puts the budget deficit for FY 1996 at only $107.3 billion, a significant drop from FY 1995 and the fourth consecutive drop since the record $290.4 billion deficit of 1992. The last time the deficit was lower than this was in 1981.

The table below gives a breakdown of some of the major spending categories and how they have changed over the last five years.

Outlays, Revenues, and Deficits
U.S. Government, FY 92-96
Billions $
Outlays 1992 1993 1994 1995 1996
Defense 298.4 291.1 281.6 272.1 265.4
Social Security 287.6 304.6 319.6 335.8 349.6
Medical/Health 208.5 230.0 251.8 275.3 293.1
Income Security 197.0 207.3 214.0 220.4 225.3
Interest on the Debt 199.4 198.8 203.0 232.2 241.1
Other 190.0 176.4 190.9 183.3 185.6
TOTAL OUTLAYS 1,380.9 1,408.2 1,460.9 1,519.1 1,560.1
Less: REVENUES 1,090.5 1,153.5 1,257.7 1,355.2 1,452.8
Equals: DEFICIT 290.4 254.7 203.2 163.9 107.3

Sources: Data for 1992-1995 from Table 1.2 of Red Ink, for FY 1996 from U.S. Treasury estimates available at http://www.ustreas.gov/treasury/bureaus/finman/mts/mts.html.

Much of the success in continuing deficit reduction is due to economic growth, which equaled an unexpected 4.7% in the third quarter of the government's fiscal year. Revenues, at $1.45 trillion, grew from the prior year at 7.2%. So long as outlays grow at a lesser rate, progress will be made on deficit reduction.

The continuing cutbacks in Defense were planned and had a significant effect, as can be seen. Some relief, however, came from an unexpected source - spending on health care at the federal level, which includes the huge Medicare and Medicaid programs, grew at only 6.5%, nearly 2% less than expected.


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