CBO Monthly Budget Review Shows Record December Deficit

The government ran record deficits of $390 billion in the first quarter of FY2010, according to the CBO’s Monthly Budget Review. Even last year, with the economic crisis in full force, the deficit was around $56 billion lower.

December itself saw a deficit of $92 billion. Normally, surpluses are recorded in this month, as many corporations make their quarterly income tax payments, and new revenue is collected from end-of-year bonuses and greater seasonal employment. Yet revenues are quite depressed, this year, as a result of lower wages, less employment, and some revenue-side stimulus measures. In fact, receipts this December were down $18 billion compared to last year.

Outlays, meanwhile, were up $22 billion. Some of this increase in outlays was due to timing shifts (as Donald Marron explains), but even controlling for that the deficit was still up 8%.

Notable spending increases include the rise in cash going toward unemployment benefits, which more than doubled in comparison to the first quarter of fiscal year 2009. Those rose by $22 billion, due to the extension in the duration of benefits. Medicaid spending was also up around 25%, with much of that increase being attributable to a provision in the American Recovery and Reinvestment Act (ARRA) which temporarily increased federal aid to states under Medicaid.

Spending associated with the financial rescue has continued to fall. TARP spending fell by $85 billion in the first quarter compared to last year, spending on government-sponsored enterprises (GSEs) fell by $1 billion, and net spending by the FDIC fell $45 billion.