U.S. Budget Gap Sets Record for Fiscal First Quarter (Update2)
By Rebecca Christie
Jan. 13 (Bloomberg) -- The U.S. budget deficit soared to a record in the first quarter of the 2009 fiscal year, surpassing the shortfall for all of last year as the government used taxpayer money to shore up the financial system by purchasing stakes in banks.
The deficit swelled to $485.2 billion in the first three months of the fiscal year that started Oct. 1, the Treasury said today in Washington. For all of 2008, the shortfall was $454.8 billion. The monthly budget picture also worsened, as the excess of spending over revenue widened to $83.6 billion in December, compared with a $48.3 billion surplus a year earlier.
President-elect Barack Obama will take over Jan. 20 facing the biggest budget deficit as a percentage of U.S. gross domestic product other than during the Civil War and the two World Wars, his nominee to head the Office of Management and Budget said today.
“We are inheriting a daunting fiscal position,” Peter Orszag, nominated by Obama to be the White House budget director, told the Senate Budget Committee. The budget shortfall in the 12-month period to Sept. 30 will likely exceed $1 trillion “even without steps to mitigate the economic downturn,” he said.
Government revenue fell 14 percent to $237.8 billion last month, while spending soared 41 percent to $321.4 billion compared with a year earlier.
Economists’ Forecasts
The December shortfall was forecast to widen to $83 billion, according to the median of 35 estimates in a Bloomberg News survey of economists, the same as the Congressional Budget Office’s prediction on Jan. 9.
Outlays in December for the Social Security Administration rose 9 percent to $58.7 billion, while Department of Defense spending increased 23 percent to $60.5 billion, the Treasury’s report showed.
Spending last month by the Department of Health and Human Services, which administers the Medicare and Medicaid health programs, totaled $63.5 billion, up 42 percent from the same month a year earlier.
The government also spent $51.1 billion in December on the financial rescue plan called the Troubled Asset Relief Program, and another $21.8 billion on purchasing mortgage debt from government-sponsored enterprises including Fannie Mae and Freddie Mac.
Obama is pressing Congress for a stimulus plan of about $775 billion, including tax cuts and spending on everything from roads and schools to the energy network, to help pull the world’s largest economy out of a slump that’s in its second year.
“Nearly every leading economist agrees we have no choice but to act aggressively to expand aggregate demand and address the macroeconomic crisis,” Orszag said. “That will necessarily imply even larger deficits in the near term.”
To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net Last Updated: January 13, 2009 14:45 EST
By Rebecca Christie
Jan. 13 (Bloomberg) -- The U.S. budget deficit soared to a record in the first quarter of the 2009 fiscal year, surpassing the shortfall for all of last year as the government used taxpayer money to shore up the financial system by purchasing stakes in banks.
The deficit swelled to $485.2 billion in the first three months of the fiscal year that started Oct. 1, the Treasury said today in Washington. For all of 2008, the shortfall was $454.8 billion. The monthly budget picture also worsened, as the excess of spending over revenue widened to $83.6 billion in December, compared with a $48.3 billion surplus a year earlier.
President-elect Barack Obama will take over Jan. 20 facing the biggest budget deficit as a percentage of U.S. gross domestic product other than during the Civil War and the two World Wars, his nominee to head the Office of Management and Budget said today.
“We are inheriting a daunting fiscal position,” Peter Orszag, nominated by Obama to be the White House budget director, told the Senate Budget Committee. The budget shortfall in the 12-month period to Sept. 30 will likely exceed $1 trillion “even without steps to mitigate the economic downturn,” he said.
Government revenue fell 14 percent to $237.8 billion last month, while spending soared 41 percent to $321.4 billion compared with a year earlier.
Economists’ Forecasts
The December shortfall was forecast to widen to $83 billion, according to the median of 35 estimates in a Bloomberg News survey of economists, the same as the Congressional Budget Office’s prediction on Jan. 9.
Outlays in December for the Social Security Administration rose 9 percent to $58.7 billion, while Department of Defense spending increased 23 percent to $60.5 billion, the Treasury’s report showed.
Spending last month by the Department of Health and Human Services, which administers the Medicare and Medicaid health programs, totaled $63.5 billion, up 42 percent from the same month a year earlier.
The government also spent $51.1 billion in December on the financial rescue plan called the Troubled Asset Relief Program, and another $21.8 billion on purchasing mortgage debt from government-sponsored enterprises including Fannie Mae and Freddie Mac.
Obama is pressing Congress for a stimulus plan of about $775 billion, including tax cuts and spending on everything from roads and schools to the energy network, to help pull the world’s largest economy out of a slump that’s in its second year.
“Nearly every leading economist agrees we have no choice but to act aggressively to expand aggregate demand and address the macroeconomic crisis,” Orszag said. “That will necessarily imply even larger deficits in the near term.”
To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net Last Updated: January 13, 2009 14:45 EST
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