The federal budget deficit hit an all-time high for April as the government kept spending to aid the recovery while revenue fell sharply.
The Treasury Department said Wednesday the April deficit soared to $82.7 billion. That was significantly higher than last year’s April deficit of $20 billion and the largest imbalance for that month on record.
The government normally runs surpluses in April as millions of taxpayers file their income tax returns. However, income tax payments were down this April, reflecting the impact of the recession which has pushed millions of people out of work.
Total revenues for April were down 7.9 percent from a year ago.
The Obama administration forecast in February that the deficit for this year will hit an all-time high of $1.56 trillion, surpassing the current record $1.4 trillion set last year. Many private economists believe this year’s imbalance will be closer to last year’s figure and that deficits will remain high for years to come.
Flashback – in January 2009 I wrote:
The estimated receipts for 2008 are $2.5 trillion. It is save to assume that the upcoming tax shortfall will dwarf all precedents. But to make the outlook as optimistic as possible we shall assume a drop of just 10% per year:
Federal tax receipts will fall to $2.25 trillion in 2009, to $2 trillion in 2010, to $1.75 trillion in 2011, and to $1.5 trillion in 2012.
Now that we have updated figures on coming expenses it’s time to update the deficit predictions:
- $1.65 trillion for 2009
- $1.6 trillion for 2010
- $1.95 trillion for 2011
- $2.2 trillion for 2012
If President Obama keeps spending like this, and really wants to cut the deficit in half by 2013, he will at one point be faced with no other choice but to raise taxes on all Americans, rich, middle class, and poor.
Reuters notes U.S. posts 19th straight monthly budget deficit:
It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had forecast and was striking since April marks the filing deadline for individual income taxes that are the main source of government revenue.
Department officials said that in prior years, there was a surplus during April in 43 out of the past 56 years.
The government has now posted 19 consecutive monthly budget deficits, the longest string of shortfalls on record.
For the first seven months of fiscal 2010, which ends September 30, the cumulative budget deficit totals $799.68 billion, down slightly from $802.3 billion in the comparable period of fiscal 2009.
Outlays during April rose to $327.96 billion from $218.75 billion in March and were up from $287.11 billion in April 2009. It was a record level of outlays for an April.
Department officials noted there were five Fridays in April this year, which helped account for higher outlays since most tax refunds are issued on that day.
But for the first seven months of the fiscal year, outlays fell to $1.99 trillion from $2.06 trillion in the comparable period of fiscal 2009, partly because of repayments by banks of bailout funds they received during the financial crisis.
Receipts in April — mostly from income taxes — were $245.27 billion, up from $153.36 billion in March but lower than the $266.21 billion taken in during April 2009.
Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to $107.31 billion from $137.67 billion in April 2009.
The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last year.
White House budget director Peter Orszag told Reuters Insider in an interview on Wednesday that the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece.
What he means by that is of course: We need to quickly raise taxes to solve the problems caused by the deficits.
See, the problem with budget deficits are that at some point higher taxes will be needed to pay off old debts. Thus, these brilliant geniuses will sooner or later tell us that the “solution to the problem of deficits will be higher taxes” … which are the very problem of deficits.
You really couldn’t make this stuff up. Only in government …
In light of consistently falling tax revenues across the board, with the reasons cited being less employment and lower sales, one just might feel impelled to be so insolent to ask: Where’s the recovery we keep hearing about all over the place?