February 5, 2009
This evening, CBO released its Monthly Budget Review, reflecting an analysis of budget data through the end of January. CBO estimates that the Treasury Department will report a deficit of $563 billion for the first four months of fiscal year 2009, $474 billion higher than the deficit incurred through January 2008. This years deficit to date includes estimated outlays of $284 billion for the Troubled Asset Relief Program (TARP). Although the Treasury is recording most spending for the TARP on a cash basis, CBO believes that the budget should record all of the programs activities, including equity investments, on a net present-value basis adjusted for market risk, as specified in the Emergency Economic Stabilization Act of 2008. Using that approach, CBO estimates that outlays of $76 billion should be recorded for the TARP through January, which would yield an estimated deficit of $355 billion through January.
Receipts for the first four months of fiscal year 2009 were about $88 billion (or 10 percent) lower than receipts during the comparable period last year. Almost half of the decline, or $43 billion, resulted from lower net corporate receipts, which fell by 43 percent. Declines in those receipts reflect the continued weakness in corporate profits stemming from the recession.
Outlays through January totaled $1,337 billion, CBO estimates$387 billion more than in the same period last year. That amount includes expenditures of $284 billion for activities by the TARP (under the cash treatment used by the Treasury) and $14 billion of equity injections for Freddie Mac. Spending for other federal programs was $123 billion higher than in the first four months of 2008; adjusted for calendar-related shifts in the timing of certain payments, program outlays rose by 12 percent (about $101 billion). In contrast, outlays for net interest on the public debt fell by 39 percent, or $35 billion, over that period because of lower costs for inflation-indexed securities and a decline in short-term interest rates.