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CBO estimates that the federal government recorded a deficit of about $3 billion during the first five months of fiscal year 2000, $23 billion less than the deficit at the same point last year. CBO expects that the budgetary outlook will continue to improve over the course of the fiscal year, yielding a total budget surplus of $179 billion for 2000 (compared with a surplus of $124 billion for fiscal year 1999).
 

The surplus in January was $62.2 billion, slightly more than the $60.8 billion that CBO had projected on the basis of the Daily Treasury Statements. Revenues were $0.5 billion higher than CBO's preliminary estimate, and outlays were $0.9 billion lower.
 

February and May are typically the months with the lowest revenues and the largest deficits. This February was no exception. CBO estimates that the deficit in February was about $44 billion, very close to the $42 billion deficit recorded in February 1999. Revenues were almost $10 billion, or about 10 percent, higher than a year ago, boosted in part by one more collection day this February. (The increase in revenues would have been $3 billion to $4 billion smaller if not for the leap day.) Outlays rose by about $12 billion, or 8 percent--substantially faster than the 4 percent increase recorded in the first four months of the fiscal year.
 

CBO estimates that the deficit for the first five months of fiscal year 2000 was $3 billion, compared with $26 billion for the same period last year (and $56 billion for the corresponding period in fiscal year 1998). Receipts were about $58 billion higher than in fiscal year 1999, while outlays were only $35 billion higher.
 

After the first five months of the fiscal year, receipts are 8.6 percent higher than they were at the same point last year. They have been boosted mostly by strong withholding for individual income and social insurance payroll taxes, especially in December and January. Revenues from corporate income taxes remain slightly above the 1999 level, after falling from 1998 to 1999.
 

CBO estimates that outlays in the first five months of fiscal year 2000 were 4.9 percent higher than in the same period last year. That growth rate is higher than the 3.1 percent rate recorded for fiscal year 1999 as a whole.

Almost all major categories of spending are growing faster this year than they did during fiscal year 1999. (Part of the apparent upturn occurs because, through February, there has been one more business day this year than last.) Defense spending is up by more than 6 percent, after rising by only 2 percent last year. Payments of Social Security benefits have risen by 3.5 percent, compared with a 2.9 percent increase last year. Medicare outlays, which declined by almost 1 percent last year, have turned up and are running almost 4 percent higher than they did in 1999.

Net interest on the public debt fell by 6 percent last year but is down by only 0.3 percent this year, as rising interest rates have offset the reductions in federal debt. Medicaid outlays are growing by almost 7 percent, about the same rate of increase as in 1999.

Net spending for the wide variety of other federal programs and activities has grown by $17 billion--about 7.5 percent--in the first five months, compared with an increase of almost 10 percent for fiscal year 1999 as a whole. Of the $17 billion increase, more than $6 billion was for additional aid to farmers. Significant increases have also been recorded for the Justice and Transportation departments and in outlays for the earned income tax credit. In addition, over the past few years, the deposit insurance agencies have gradually disposed of most of the assets they obtained from failed financial institutions. Receipts from that source have fallen and thus net outlays of those agencies are rising.
 

CBO and the Office of Management and Budget (OMB) have recently released new projections of the budget outlook for fiscal year 2000, which are very similar. Both agencies now estimate a total surplus of $179 billion (in the absence of additional spending legislation). CBO anticipates that both receipts and outlays will be $10 billion to $11 billion less than OMB forecasts. CBO is projecting that revenues will increase by 6.4 percent this year and outlays will grow by 3.7 percent. (See An Analysis of the President's Budgetary Proposals for Fiscal Year 2001: A Preliminary Report, March 2000.) CBO forecasts an on-budget surplus for 2000 of $26 billion, slightly less than OMB's estimate of $32 billion.

NOTE: Unless otherwise indicated, the figures in this report include the Social Security trust funds and the Postal Service fund, which are off-budget. Numbers may not add up to totals because of rounding.