Happy Fourth of July!
Just wanted to let our loyal BudgetBlog readers know we're going on a short hiatus next week. With Congress heading out of town for a short summer recess and the upcoming Fourth of July holiday next week, the Fiscal Policy team is heading out of town in order to escape the heat for some well-deserved vacation. This means, though, that the BudgetBlog will be dormant next week.

But don't despair. Craig and I will return in one short week on July 7 to continue to bring you all the news, gossip, information, and analysis on federal fiscal policy you've come to expect.

Hope everyone has a safe and festive Independence Day next week - be careful with those fireworks.

As this graph from the Current Population Survey shows, the recent rate of increase in the number of jobless workers -- which runs through March of this year and so does not include the surge in unemployment recorded for the month of May -- may signal an "official" recession. But don't tell the American people that.

Three-quarters of us say that we're in one already.

The Center on Budget and Policy Priorities has a helpful policy brief out today that runs through all the reasons the upcoming package of tax cuts -- popularly referred to as the "extenders" package -- should be offset. We couldn't agree with CBPP more. In their brief, they make four main points, the last of which is probably the most important:

• Congress should pay for the tax extenders, as its budget rules require.
• Arguments against applying PAYGO to the extenders bill do not withstand scrutiny..
• The offsets in the House-passed bill are reasonable policy.
• In the future, Congress should subject the extenders to greater scrutiny.

CBPP makes a great point with the fourth one on the list. There has not been any mention during debate on the extenders this year (or in any past year I can remember) that considered whether some of the provisions of the "extenders" package should continue to exist. House Ways and Means Committee Chairman Charles Rangel (D-NY) did mention during a committee markup that a comprehensive review of the package to determine which aspects were achieving their goals was necessary, but that review has not yet taken place. The popular name of the package itself -- the "extenders -- implies these tax policy provision will live on year after year without any review.

Hopefully while Congress tries to get its act together in order to go the extra mile and do a comprehensive review of the "extenders" package, they will at least do no harm and pay for the policies they want to extend wholesale.

The good folks over at the Congressional Budget Office (CBO) released their monthly budget review yesterday. Some highlights of the number crunching in the report are below:

The federal government incurred a deficit of about $317 billion during the first eight months of fiscal year 2008, CBO estimates, $168 billion more than the shortfall recorded through May of last year. About $50 billion of that change is due to the distribution to individuals of the tax rebates enacted in the Economic Stimulus Act of 2008. That amount is just under half of the total rebates expected for this year; most of the remainder will be disbursed during the next two months.

...

CBO estimates that the federal government recorded a deficit of $165 billion in May, about $97 billion more than the deficit recorded in May 2007. About half of that increase was due to rebate payments, which are recorded as either reductions in revenues or increases in outlays. (When a rebate exceeds an individual's federal income tax payment, the excess is classified as an outlay in the budget.)

...

Outlays were $174 billion higher than in the October-May period last year, far outpacing the $6 billion growth in net revenues...

The broad category of other programs and activities accounted for almost half of the increase in outlays through May. Spending for that category was up by 12.6 percent on an adjusted basis, reflecting an estimated $19 billion in rebate payments as well as double-digit growth in outlays for refundable tax credits, veterans' health programs, unemployment benefits, and food and nutrition services. Defense outlays have also grown rapidly in recent months, rising by 10 percent through May, compared with 7 percent in fiscal year 2007. Much of the growth this year has been driven by a 14 percent increase in spending for military operations, maintenance, and procurement, well above last year's average gain of 8 percent for those activities.

CBO: Monthly Budget Review