The federal budget deficit is running at a pace that is more than double last year’s imbalance through the first four months of the budget year.
In its monthly review of the government’s finances, the Treasury Department said Tuesday that the budget was in surplus in January, but the deficit totals $87.7 billion so far this budget year, double the $42.2 billion imbalance recorded during the same period in 2007. The new budget year started last Oct. 1.
The Bush administration sent its final budget request to Congress last week, projecting that the deficit for all of 2008 will total $410 billion, very close to the all-time high in dollar terms of $413 billion in 2004.
So far this year, federal spending is 8.3 percent ahead of last year’s pace, at $949.1 billion. That is far ahead of the 3.2 percent increase in revenues, which have totaled $861.4 billion in the current budget year.
For 2007, the budget deficit totaled $162 billion, a five-year low. However, the slowing economy is expected to stunt the growth of tax revenues while the $168 billion economic stimulus plan passed by Congress last week will swell the deficit.
It is hoped the stimulus plan will keep the economy out of a recession or at least make the downturn milder and shorter than it otherwise would have been. The rebate checks are expected to start being mailed out in May with most Americans getting checks of $600 for individuals and $1,200 for couples filing their tax returns jointly. In addition, families with children will get an extra $300 per child.
For January, the surplus totaled $17.8 billion. That was down from a January 2007 surplus of $38.2 billion. The government’s books are often in surplus in January because it is a month when many individual taxpayers make a quarterly estimated payment.
While the administration is projecting that the deficit for the current 2008 budget year will total $410 billion and decline only slightly to $407 billion in 2009, it projects a significant improvement after those years.
Bush’s budget said that the president’s goal of getting the budget back into balance in 2012, three years after he leaves office, is still achievable, forecasting a balance that year of $48 billion.
However, private forecaster have termed the administration’s deficit projections unrealistic.
Goldman Sachs economists said last week that they had boosted their deficit forecast for this year to $425 billion and to $440 billion in 2009, reflecting the stimulus package.