The Fiscal Year 2008 Federal Deficit

October 16, 2008

The 2008 deficit totaled $455 billion, roughly $17 billion more than the $438 billion estimated by CBO on October 7th.That difference does not reflect any economic or programmatic developments; rather, it reflects an accounting adjustment by the Department of the Treasury, which increased the outlay and deficit figures for June 2008 by $17 billion. In fact, the surplus for the month of September that was reported in the Monthly Treasury Statement (MTS) was slightly more than CBO had estimated.

The accounting adjustment corrected the amounts reported by the Federal Communications Commission (FCC) for offsetting receipts from the March 2008 auction of licenses to use the electromagnetic spectrum made available by the transition to digital television. Proceeds from that auction, which totaled nearly $19 billion, are deposited in the Digital Television Transition and Public Safety Fund administered by the Department of Commerce.

The Department of the Treasury adjusted the June outlay figures because the FCC had recorded receipts before it had issued the licenses to the winning bidders. Proceeds from such auctions, as well as from leasing activities and similar asset sales, are deposited in the Treasury soon after an auction closes but are not classified as federal receipts until the government awards the licenses. In this case, the FCC recorded the entire $19 billion in the June MTS in an effort to comply with a statutory directive to book those receipts by June 30, notwithstanding the fact that few licenses had been issued at that time.Because the receipts should not have been recorded at that time, the Treasury has reversed $17.2 billion of the $19 billion that was recorded in June, reducing the surplus for that month from $51 billion to $34 billion (see footnote 2 on Table 1 of in the MTS for September).

CBO anticipates that most or all of the pending licenses will be awarded in the near future and that the receipts will be recorded in fiscal year 2009.