Monthly Budget Review Reports $655 billion deficit in FY 2010 Thus Far
The Congressional Budget Office issued its Monthly Budget Review yesterday. It estimates that the federal government incurred a deficit of $655 billion for the first five months of fiscal year 2010. This is $65 billion more than the deficit recorded for this same period last year. Outlays were at about the same level as last year and the decreases in TARP and FDIC spending were offset by increased spending on entitlement programs. Outlays for unemployment benefits increased by $33 billion (a whopping 93 percent) over last year because of the high unemployment rate and congressional action to extend those benefits. And spending on net interest on the federal debt also rose by 39 percent compared to last year.
The increase in the deficit resulted from lower revenues ($65 billion or about 7 percent lower than last year). This decline is mainly from lower withheld taxes due to lower wages, the Making Work Pay tax changes ($54 billion), and larger corporate tax refunds due to lower profitability ($11 billion).
CBO estimates that the February deficit was, at $223 billion, $30 billion higher than it was last February. However, receipts in February were $16 billion higher than last year, the first increase in a year-to year comparison since April 2008.