Government receipts and expenditures: first quarter of 2008.

Chaudhuri, Debasis

NET GOVERNMENT saving, the difference between current receipts and current expenditures of the federal government and state and local governments, was -$375.6 billion in the first quarter of 2008, decreasing $115.3 billion from -$260.3 billion in the fourth quarter of 2007.

Net federal government saving was -$311.9 billion in the first quarter, decreasing $93.4 billion from -$218.5 billion in the fourth quarter (see page 12). Current receipts turned down, and current expenditures accelerated.

Net state and local government saving was -$63.7 billion in the first quarter, decreasing $21.8 billion from -$41.9 billion in the fourth quarter (see page 13). Current receipts accelerated, and current expenditures decelerated.

Net borrowing was $567.1 billion in the first quarter, increasing $105.4 billion from $461.7 billion in the fourth quarter. Federal government net borrowing was $374.5 billion in the first quarter, increasing $83.8 billion from $290.7 billion in the fourth quarter. State and local government net borrowing was $192.7 billion in the first quarter, increasing $21.6 billion from $171.1 billion in the fourth quarter.

[GRAPHIC 1 OMITTED]

Federal Government

Personal current taxes turned down in the first quarter as a result of a downturn in nonwithheld income taxes.

Taxes on corporate income decreased more in the first quarter than in the fourth quarter as a result of the Economic Stimulus Act of 2008 that provided a first-year bonus depreciation of 50 percent for qualifying property purchased in 2008 and raised the ceiling for small business expensing (see the box on the effect of this act on corporate profits on page 10).

Taxes from the rest of the world turned down, following a fourth-quarter boost in taxes paid by U.S. affiliates of foreign corporations.

Contributions for government social insurance accelerated. Social security contributions accelerated as the maximum taxable wage base increased to $102,000 in 2008 from $97,500 in 2007. Contributions for supplementary medical insurance accelerated mainly because the monthly premiums for Medicare Part B increased.

Defense expenditures accelerated. Compensation of employees was boosted $5.3 billion because of the January 2008 pay raise. Spending for services accelerated, and spending for durable goods turned up.

Nondefense expenditures accelerated, primarily as a result of the January 2008 pay raise that boosted compensation $3.5 billion.

Government social benefits to persons accelerated, reflecting an acceleration in benefits for social security and an upturn in benefits for Medicare. A 2.3 percent cost-of-living adjustment boosted benefits for social security, veterans pensions, supplemental security income, and other programs by $15.5 billion.

Other current transfer payments to the rest of the world decelerated, reflecting a downturn in payments to Afghanistan.

Interest payments turned up, reflecting an upturn in interest paid to persons and business on Treasury Inflation-Protected Securities.

State and Local Government

Personal current taxes accelerated in the first quarter, reflecting an acceleration in state personal income taxes.

Taxes on corporate income decreased more in the first quarter than in the fourth quarter, reflecting the effect of the Economic Stimulus Act of 2008.

Consumption expenditures accelerated, reflecting an acceleration in spending for nondurable goods and services.

Government social benefit payments turned down, reflecting a downturn in Medicaid expenditures.

Gross government investment turned down, reflecting a downturn in investment for structures.

Federal Government Estimates

Estimates of federal government current receipts, current expenditures, and net federal government saving are based on data from the federal budget, from the Monthly Treasury Statement and other reports from the Department of the Treasury, and from other federal government agencies. Total receipts, total expenditures, and net lending or net borrowing, which are alternative measures of the federal fiscal position, are based on these same sources.

Quarterly and annual estimates are published monthly in NIPA table 3.2. Detailed annual estimates of these transactions by component are published annually in NIPA tables 3.4-3.8, 3.12, and 3.13. Detailed quarterly estimates are available in underlying NIPA tables at <www.bea.gov/bea/ dn/nipaweb/nipa_underlying/Index.asp>.

Estimates of State and Local Government Receipts and Expenditures

The estimates of state and local government current receipts and expenditures and total receipts and expenditures are mainly based on compilations of data for state and local government finances. The Census Bureau produces the primary source data: the census of governments that is conducted in years that end in a 2 or a 7 and the Government Finances series of surveys for the other years. In addition, other sources of Census Bureau data are from the Quarterly Summary of State and Local Government Tax Revenue and the monthly Value of Construction Put in Place. Data sources from the Bureau of Labor Statistics include the Quarterly Census of Employment and Wages and the Employment Cost Index.

Quarterly and annual estimates are available monthly in NIPA table 3.3. Detailed annual estimates of state and local government transactions by component are available annually in NIPA tables 3.4-3.8, 3.12, and 3.13. Detailed quarterly estimates are available in underlying NIPA tables at <www.bea.gov/bea/dn/nipaweb/nipa_underlying/ Index.asp>. For a historical time series of reconciliations of the NIPA estimates with the Census Bureau data from Government Finances, see NIPA table 3.19.

BEA also prepares annual estimates of receipts and expenditures of state governments and of local governments. (1) These estimates are available annually in NIPA table 3.20 (state government receipts and expenditures) and in NIPA table 3.21 (local government receipts and expenditures); see "Newly Available NIPA Tables" in the October 2007 SURVEY.

(1.) Bruce E. Baker, "Receipts and Expenditures of State Governments and of Local Governments" SURVEY 85 (October 2005): 5-10.

Table 1. Net Government Saving and Net Lending or Net Borrowing
[Billions of dollars, seasonally adjusted at annual rates]

 Level

 2008

 I

Current receipts 4,237.7
Current expenditures 4,613.3
Net government saving -375.6
 Federal -311.9
 State and local -63.7
Net lending or net borrowing (-) -567.1
 Federal -374.5
 State and local -192.7

 Change from preceding quarter

 2007 2008

 II III IV I

Current receipts 81.6 19.2 37.2 -2.6
Current expenditures 50.6 69.2 54.2 112.7
Net government saving 30.9 -49.8 -17.1 -115.3
 Federal 11.7 -23.5 11.8 -93.4
 State and local 19.2 -26.4 -28.9 -21.8
Net lending or net borrowing (-) 30.9 -64.2 -23.9 -105.4
 Federal 10.5 -38.6 13.0 -83.8
 State and local 20.4 -25.6 -37.0 -21.6

Table 2. Federal Government Current Receipts and Expenditures
[Billions of dollars, seasonally adjusted at annual rates]

 Level

 2008

 I

 Current receipts 2,698.0
Current tax receipts 1,641.2
 Personal current taxes 1,186.6
 Taxes on production and imports 104.5
 Taxes on corporate income 336.4
 Taxes from the rest of the world 13.7
Contributions for government social
 insurance 989.7
Income receipts on assets 25.6
Current transfer receipts 42.7
Current surplus of government
 enterprises -1.2
 Current expenditures 3,009.9
Consumption expenditures 900.8
 National defense 613.9
 Nondefense 286.9
Current transfer payments 1,746.5
 Government social benefits 1,321.6
 To persons 1,317.8
 To the rest of the world 3.8
 Other current transfer payments 424.9
 Grants-in-aid to state and
 local governments 381.4
 To the rest of the world 43.5

Interest payments 314.6
Subsidies 48.0
Less: Wage accruals less
 disbursements 0.0
Net federal government saving -311.9
Social insurance funds -5.9
Other -306.0
Addenda:
 Total receipts 2,725.3
 Current receipts 2,698.0
 Capital transfer receipts 27.3
 Total expenditures 3,099.8
 Current expenditures 3,009.9
 Gross government investment 122.7
 Capital transfer payments 88.5
 Net purchases of nonproduced
 assets -7.7
 Less: Consumption of fixed
 capital 113.5
Net lending or net borrowing (-) -374.5

 Change from preceding quarter

 2007 2008

 II III IV I

 Current receipts 50.4 19.3 25.3 -16.7
Current tax receipts 44.2 4.0 12.9 -38.9
 Personal current taxes 12.9 19.0 21.2 -5.3
 Taxes on production and imports 0.4 3.1 0.8 2.3
 Taxes on corporate income 31.0 -18.8 -13.4 -32.7
 Taxes from the rest of the world 0.0 0.6 4.4 -3.3
Contributions for government social
 insurance 2.3 11.0 10.8 21.6
Income receipts on assets 0.5 0.2 0.1 0.2
Current transfer receipts 0.4 0.9 2.0 1.3
Current surplus of government
 enterprises 3.1 3.2 -0.6 -0.8
 Current expenditures 38.7 42.8 13.5 76.7
Consumption expenditures 20.0 17.9 9.2 23.9
 National defense 18.1 15.8 6.8 17.5
 Nondefense 2.0 2.1 2.4 6.4
Current transfer payments 5.3 25.5 18.1 32.0
 Government social benefits 22.9 14.9 4.8 30.5
 To persons 22.8 14.8 4.9 30.3
 To the rest of the world 0.1 0.1 -0.2 0.3
 Other current transfer payments -17.5 10.7 13.2 1.5
 Grants-in-aid to state and
 local governments 2.1 3.0 1.6 0.7
 To the rest of the world -19.7 7.8 11.6 0.8

Interest payments 13.1 -0.1 -14.6 19.9
Subsidies 0.3 -0.7 0.9 0.9
Less: Wage accruals less
 disbursements 0.0 0.0 0.0 0.0
Net federal government saving 11.7 -23.5 11.8 -93.4
Social insurance funds -17.8 -2.3 10.6 2.7
Other 29.5 -21.2 1.2 -96.1
Addenda:
 Total receipts 57.1 16.4 27.9 -17.7
 Current receipts 50.4 19.3 25.3 -16.7
 Capital transfer receipts 6.7 -2.8 2.4 -0.9
 Total expenditures 46.6 55.0 14.8 66.2
 Current expenditures 38.7 42.8 13.5 76.7
 Gross government investment 3.0 2.8 -1.8 1.9
 Capital transfer payments 7.5 5.7 8.2 -5.0
 Net purchases of nonproduced
 assets -1.0 4.5 -3.9 -6.0
 Less: Consumption of fixed
 capital 1.6 0.7 1.1 1.5
Net lending or net borrowing (-) 10.5 -38.6 13.0 -83.8

Table 3. State and Local Government Current Receipts and Expenditures
[Billions of dollars, seasonally adjusted at annual rates]

 Level

 2008

 I

 Current receipts 1,921.0
Current tax receipts 1,315.0
 Personal current taxes 329.5
 Taxes on production and imports 929.7
 Taxes on corporate income 55.9
Contributions for government social
 insurance 26.2
Income receipts on assets 92.4
Current transfer receipts 500.5
 Federal grants-in-aid 381.4
 Other 119.1
Current surplus of government
 enterprises -13.2

 Current expenditures 1,984.8
Consumption expenditures 1,442.9
Government social benefits 440.2
Interest payments 101.2
Subsidies 0.4
Less: Wage accruals less
 disbursements 0.0
Net state and local government
 saving -63.7
Social insurance funds 6.0
Other -69.7
Addenda:
 Total receipts 1,976.1
 Current receipts 1,921.0
 Capital transfer receipts 55.1
 Total expenditures 2,168.8
 Current expenditures 1,984.8
 Gross government investment 358.4
 Capital transfer payments ...
 Net purchases of nonproduced
 assets 11.5
 Less: Consumption of fixed
 capital 185.8
Net lending or net borrowing (-) -192.7

 Change from preceding quarter

 2007 2008

 II III IV I

 Current receipts 33.3 2.9 13.4 14.8
Current tax receipts 28.5 -3.0 9.0 9.9
 Personal current taxes 10.0 -0.8 1.8 8.6
 Taxes on production and imports 12.8 7.2 9.5 7.2
 Taxes on corporate income 5.6 -3.3 -2.4 -5.8
Contributions for government social
 insurance 0.1 0.0 0.1 0.2
Income receipts on assets 0.6 1.1 0.8 1.6
Current transfer receipts 4.3 5.2 3.9 3.5
 Federal grants-in-aid 2.1 3.0 1.6 0.7
 Other 2.3 2.3 2.2 2.8
Current surplus of government
 enterprises -0.2 -0.4 -0.3 -0.5

 Current expenditures 14.1 29.3 42.3 36.7
Consumption expenditures 29.2 18.4 32.1 36.5
Government social benefits -16.6 10.2 9.2 -0.7
Interest payments 1.3 0.7 1.1 0.8
Subsidies 0.0 0.0 0.0 0.0
Less: Wage accruals less
 disbursements 0.0 0.0 0.0 0.0
Net state and local government
 saving 19.2 -26.4 -28.9 -21.8
Social insurance funds -0.1 -0.2 -0.1 0.1
Other 19.4 -26.2 -28.8 -21.9
Addenda:
 Total receipts 40.7 8.0 10.4 9.7
 Current receipts 33.3 2.9 13.4 14.8
 Capital transfer receipts 7.5 5.0 -2.9 -5.1
 Total expenditures 20.4 33.6 47.3 31.4
 Current expenditures 14.1 29.3 8.4 36.7
 Gross government investment 9.5 7.4 8.4 -1.9
 Capital transfer payments ... ... ... ...
 Net purchases of nonproduced
 assets 0.0 0.0 0.0 0.1
 Less: Consumption of fixed
 capital 3.2 3.1 3.4 3.4
Net lending or net borrowing (-) 20.4 -25.6 -37.0 -21.6