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Mixed news in this year's fiscal midterm report card

From msnbc.com's Tom Curry:  With no accord between the president and Congress on a spending plan for the remainder of this fiscal year, much less any prospect of reaching a budget consensus for the new fiscal year which starts in October, the government has reached the halfway point in fiscal year 2011.

The Congressional Budget Office reported Thursday that federal spending is growing more slowly than revenue – once you adjust the data for some special factors such as pre-payment of Federal Deposit Insurance Corporation premiums.

The encouraging news in the CBO report is that revenues are up 7 percent, compared to the first six months of the previous year. Personal income tax revenues jumped by more than 20 percent, compared to the same period last year, evidence of a recovery in incomes and in hiring.  (About 1.3 million more people were working last month than in March of 2010.)

CBO said that overall spending growth is outrunning revenue growth: total outlays were up by $179 billion, or 11 percent. But it said that figure was skewed by special factors in the previous fiscal year, such as the FDIC pre-payments.

So CBO said adjusted federal spending growth – sifting out the onetime factors – is at about one percent.

National income, or gross domestic product, is growing by about 3.5 percent. So if that trend were to continue – faster GDP growth than federal spending growth – the deficit would begin to shrink.

The fastest growing categories of spending in the first half of the fiscal year: interest on the government debt, which was up 13 percent and the Medicaid health insurance program for low-income people, up by nearly 9 percent.

The cost of paying interest on the debt now accounts for nearly 7 percent of all federal outlays.

The level of federal debt is now higher than at any time since 1947 when the government was paying off the costs of fighting the Second World War. CBO forecasts that it will go even higher in the years ahead.

“With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket over the next decade,” CBO warned last January.

Raising the federal government’s borrowing limit will dominate congressional debate in the next several weeks, with Treasury Secretary Tim Geithner having warned Congress this week that the debt limit will be reached no later than May 16.

A new NBC News /Wall Street Journal poll showed that only 16 percent of those polled think Congress should raise the debt ceiling; 46 percent opposed the ideas and 38 percent said they didn’t know enough to have an opinion.