Last August, the Congressional Budget Office projected that the budget deficit in 2011 would be $1.066 trillion. Two days ago, the CBO revised the projection upwards by 39 percent to $1.480 trillion. What drove the projected deficit to rise by $414 billion in the last few months? Has there been a burst of new spending out of Congress? Absolutely not. In fact, projected spending has fallen by $5.5 billion since August. Rather, projected revenues have fallen by $419 billion.

Of the $419 billion decrease in projected revenues, $354 billion of this was directly attributable to the tax cuts enacted during the recent lame-duck session. The deal did include $37 billion in new spending-- $35 billion of which was extension of unemployment benefits—but the fact that total spending fell by $5.5 billion means that falls in projected non-UI spending more than made up for the new spending.

Given that the projection for total spending has fallen, the budget numbers may look a little funny out of context. The "on-budget" numbers—excluding the Social Security surpluses and net cash flow of the Postal Service—show an increase in projected spending of $74.3 billion. This was entirely due to the payroll tax cut. Instead of cheating current beneficiaries by running down the trust fund, Congress moved $84 billion of Social Security spending on-budget. Outside of that accounting change, on-budget spending fell by $10 billion.

In short, it is true that CBO's projected deficit for 2011 has grown since August, but clearly it has nothing to do with increased spending.

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