CBO Monthly Budget Review, October 2009

On Friday, the Congressional Budget Office (CBO) released its Monthly Budget Review [2] (MBR) for October. It's a look back at the good old days of Fiscal Year 2009, with all the spending, and borrowing and loss of revenue...wait, did I say "good old days?" Let's examine CBO's goodbye to the not-so-great fiscal year that was.

CBO tells us that the federal government recorded a total budget deficit of $1.4 trillion last fiscal year, which we have known [3] for quite some time. This total is about $960 billion more than the deficit incurred in 2008. More alarmingly, at least to those easily scared by such numbers, the deficit rose as a percentage of the Gross Domestic Product (GDP) to 9.9 percent – an increase of 6.8 percent. This is the highest percentage of debt to GDP since 1945.

As I have stated in previous posts [4], this should not be of great concern right now. We have a high deficit for several reasons, including a precipitous decline in revenues – as people weren't making as much money in the recession as they had been before the downturn – and a steep increase in government spending, most of which entailed the government attempting to fill in for the lack of spending by those lower-earning individuals and states.

The report has a wonderful graph depicting these two trends:

Not to worry you anymore, but the CBO's estimate for the first month of Fiscal Year 2010 – based on the Monthly Treasury Statement for September and the Daily Treasury Statements for October – shows that these trends are going to continue into the near future:

CBO estimates that the government recorded a deficit of $175 billion in October, about $19 billion more than the shortfall recorded in the same month last year. Revenues were $29 billion, or 18 percent, lower than they were last October; most of that decline stemmed from reductions in withheld individual income and payroll taxes resulting from continued economic weakness and the revenue-reducing provisions of ARRA.

Read the rest of the CBO report [2] to soak up all the dismal estimates, budget totals, and receipts and outlays you can get your hands on.

Image by Flickr user johnsolid [5] used under a Creative Commons license.