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Government to post huge deficit under CBO estimate
[December 05, 2008] WASHINGTON (AP) -- Payments from the Wall Street bailout fund and slumping tax revenues will ensure a record federal budget deficit, based on congressional estimates released on Thursday.
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The Congressional Budget Office said that the government has run a $408 billion deficit -- under Treasury Department accounting rules -- in just the first two months of the 2009 budget year, which started Oct. 1. Many economists say the deficit will soar above $1 trillion in 2009 as Congress passes a new economic stimulus measure and money pours from the Troubled Assets Relief Fund, or TARP, as the government hopes to right the economy. The CBO itself says the deficit should be considered to be lower since the government will get back much of the money distributed through the rescue of the financial industry. Under those "net present value" terms, CBO estimates the deficit for October and November at $267 billion. Either way, it's a bleak fiscal picture for the incoming Obama administration. Tax receipts are down by almost 6 percent, including corporate income tax revenues, which have totaled just $1 billion over the first two months of the budget year. At the same time, spending is rising sharply on programs like bank deposit insurance, unemployment compensation and food stamps, a reflection of the souring economy. In October, the government posted a record $455 billion deficit for 2008, but economists such as Mark Zandi of Moody's Economy.com say deficits of more than $1 trillion are likely for 2009 and 2010. Adjusted for the size of the economy, the measure deemed most relevant by economists, such numbers would also be records, eclipsing the Reagan-era figures. But it's hoped that repayments from the financial bailout and an economic recovery will eventually restore deficits to a more acceptable level. |
