Federal government going for broke
Editor’s note: The following is the first of a five-part series on government budgets and government spending that comprise the 2012 Keating Report. The topics we are covering include: federal budgets, state budgets, public-private partnerships, local government budget trends and government construction.
Federal revenues will rise to $2.64 trillion in 2012, up from $2.31 trillion in 2011, the Congressional Budget Office (CBO) says. CBO has predicted that the federal budget deficit for 2012 will reach $973 billion. The CBO, though, based its forecast on Congress’ Supercommittee successfully completing its work, which never happened. IHS Global Insight expects the federal budget deficit to narrow to $1.1 trillion from $1.3 trillion in 2011.
As the 2012 Keating Report was being prepared, legislative gridlock continued in Washington. Congress ultimately passed a two-month payroll tax cut extension backed by the White House. The legislation averted a New Year’s tax increase of two percentage points for millions of workers. Russell Price, senior economist for Minneapolis-based Ameriprise Financial Services, estimates that a full-year extension of the payroll tax holiday for workers would likely add between 750,000 and 1 million jobs in 2012.
To date, Congress has avoided a government shutdown, even if it has not seriously addressed the budget deficit. It was successful in passing legislation that will fund federal operations (to the tune of almost $1 trillion) through Sept. 30, 2012.
And yes, Congress is looking to add federal revenues through regulating online gambling. The Internet Gambling Regulation and Tax Enforcement Act of 2011 (H.R. 2230) has five co-sponsors. Two House committees are considering the legislation, which would amend the Internal Revenue Code to impose a tax on each Internet gambling licensee equal to 2 percent of all funds deposited by Internet gambling customers of such licensee for placing a bet or wager, and an additional 50 percent tax on unauthorized bets or wagers.
View additional installments of our 2012 forecast as well as the 2011 Mid-Year forecast.
