On Thursday, the Congressional Budget Office released its latest snapshot on the federal budget. The headlines:
- The budget deficit was almost $1.3 trillion during the first ten months of the fiscal year (through July). That’s up from $389 billion at this point last year.
- Spending has risen 21% over last year, while tax revenues have fallen by 17%.
- CBO estimates that $125 billion of the increased spending and decreased revenues are the result of this year’s stimulus act.
The chart shows the main drivers of the exploding deficit:
Continue reading “Federal Deficit Up to $1.3 trillion”
Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (affectionately known as SIGTARP), is making headlines with his estimate that the government has provided “potential support totaling more than $23.7 trillion” in fighting the financial crisis. That estimate will be officially released on Tuesday morning in the SIGTARP’s latest quarterly report (you can find an early copy here – ht WSJ).
As the media are already noting (e.g., WSJ and Yahoo), there are many reasons to believe that the $23.7 trillion figure is overstated. For example, as noted in the footnote to the table above, the figure “may include overlapping agency liabilities … and unfunded initiatives [and] … does not account for collateral pledged.” In other words, there may be double-counting, some of the programs won’t happen or are already winding down, and the estimates assume that any collateral is worthless. For example, to get to $5.5 trillion in potential losses on Fannie Mae and Freddie Mac (part of the $7.2 trillion Other category), you would have to assume that all GSE-backed mortgages default and that all houses backing them are worthless.
In short, the SIGTARP estimate is a way upper-bound on likely Federal support to the financial support. That fact shouldn’t detract, however, from the importance of the rest of this report.
Continue reading “Beyond the $23.7 Trillion Headline”
Yesterday, the Congressional Budget Office released its latest snapshot on the federal budget. The headlines:
- The budget deficit was $1.1 trillion during the first nine months of the fiscal year (through June). That’s up from $286 billion at this point last year.
- Spending has risen 21% over last year, while tax revenues have fallen 18%.
- For the first time in more than ten years, the government ran a deficit in June. June is a big tax-paying month, so it usually records a surplus.
The charts shows the main drivers of the exploding deficit:
Continue reading “The Exploding Federal Deficit”