July 8, 2009
The federal budget deficit was $1.1 trillion for the first nine months of fiscal year 2009, CBO estimates in today's Monthly Budget Review, more than $800 billion greater than the deficit recorded through June 2008. Outlays are 21 percent higher than they were in the first three quarters of 2008, but revenues have fallen by 18 percent.
The federal government recorded a deficit of $97 billion in June, CBO estimates. Declining revenues and increasing spending resulted in the first June deficit in more than 10 years. Quarterly payments of estimated individual income taxes and corporate income taxes typically result in a budget surplus for the month. CBO estimates that receipts in June were about $46 billion (or 18 percent) lower than receipts in June 2008, marking the fourteenth consecutive month in which receipts were lower than those in the same month of the previous year. Net corporate receipts were $24 billion (or 41 percent) below those in June 2008, accounting for about half of the overall decline.
For the first nine months of the fiscal year, declining receipts from individual income and payroll taxes account for almost 60 percent of the overall decrease in receipts. Those collections are down by almost $200 billion. Withholding of income and payroll taxes fell by about $80 billion (or 6 percent) compared with receipts in the first three quarters of 2008, primarily because of the ongoing effects of the recession on wages and salaries and the effective tax rates on that income. Receipts from corporate income taxes have declined sharply, falling by $133 billion (or 56 percent).
Outlays through June were $457 billion higher than in the same period last year, CBO estimates. That total includes $147 billion forthe Troubled Asset Relief Program (TARP), recorded on a net-present-value basis, and spending of $83 billion in support of Fannie Mae and Freddie Mac. Spending for all other federal programs rose by nearly 14 percent (or $275 billion) relative to outlays in the first nine months of fiscal year 2008. In contrast, net outlays for interest on the public debt declined by more than 25 percent (or $49 billion) because of lower short-term interest rates and lower costs for inflation-indexed securities.
Outlays for unemployment benefits so far this year are more than 2 times what they were at this point last year. About half of that increase stems from the higher unemployment rate; the rest comes from legislation that boosted the duration and amount of those benefits.