U.S. Budget Deficit Was Little Changed in August
The U.S. budget deficit was little changed last month from a year earlier and narrower than economists predicted as tax receipts shrank and spending fell for the first time since February.
The excess of spending over revenue totaled $111.4 billion in August, compared with $111.9 billion a year earlier, the Treasury reported in Washington. The shortfall was a record $1.38 trillion in the first 11 months of the fiscal year that ends Sept. 30. Spending declined 4.5 percent to $256.9 billion in August and revenue fell 7.3 percent to $145.5 billion.
President Barack Obama urged a joint session of Congress this week to pass a $900 billion health-care plan to contain medical costs, which are causing Medicare and Medicaid spending to surge. Obama signed a $787 billion stimulus program in February and committed funds to rescue automakers and banks.
“If the economy comes back, we could see revenues improve a bit, but it still looks like the spending side is going be an issue,” said Gary Thayer, macro strategist at Wells Fargo Advisors LLC in St. Louis. “It’s likely we’ll see another big budget deficit next fiscal year.”
Economists surveyed by Bloomberg News forecast an August deficit of $139.5 billion, according to the median of 24 estimates. Projections ranged from deficits of $90 billion to $190 billion. The Congressional Budget Office on Sept. 8 estimated a budget shortfall of $117 billion for August.
Unemployment
The unemployment rate reached 9.7 percent in August, a quarter-century high, and employers have shed almost 7 million jobs since the recession started in December 2007. Overall economic growth, as measured by gross domestic product, contracted in the second half of last year and the first half of this year good credit score.
For all of fiscal 2009, the deficit will total $1.6 trillion as revenue falls and government spending increases at the fastest pace in 57 years, according to projections released Aug. 25 by the non-partisan CBO.
Next year the deficit will total $1.4 trillion, the CBO said. It also said it anticipated a “relatively slow and tentative” economic recovery because of “global economic weakness, continued strains in financial markets and households’ desire to rebuild their savings.”
Tax Receipts
Through August, corporate tax receipts totaled $109.4 billion versus $250.7 billion in the year-earlier period, a 56 percent drop, according to the Treasury Department’s figures. Individual income tax collections were down 20 percent so far this fiscal year to $812.9 billion, compared with $1 trillion.
Spending by the Social Security Administration rose to $666.3 billion from $605.7 billion for the fiscal year to date; spending by the Department of Health and Human Services, which administers the Medicare and Medicaid health programs, rose to $729.6 billion from $653.9 billion and spending by the Defense Department rose to $576.4 billion from $542.7 billion.
The Treasury also said that for the fiscal year to date it has spent $174.2 billion on the financial rescue plan called the Troubled Asset Relief Program, and $84.9 billion to purchase mortgage debt from government-sponsored enterprises including Fannie Mae and Freddie Mac, both in conservatorship.
Filed under: economics by Guru