Deficit grew by $181 billion in July

[Psephos]

Source: The Hill

Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).

Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July. Falling tax receipts and increased spending on bailouts for auto companies and the financial sector and for the economic stimulus package added to the deficit, according to CBO, which provides official budget numbers for Congress.

Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.

Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes. A third of the decline is due to tax breaks in the stimulus, including the middle-class tax cut that President Obama campaigned on during last year's election. The independent budget scorekeeper has projected the deficit to reach $1.8 trillion by the end of the fiscal year, Sept. 30. The deficit in 2008 reached $455 billion, which was a record at the time.

Read more: http://thehill.com/leading-the-news/deficit-grew-by-181-billion-in-july-2009-08-09.html

[Cant trust em]

1. "A third of the decline is due to tax breaks in the stimulus"

Remember this when you hear the GOP whining about the deficit increase.

[Psephos]

2. That's a great point, however, that works out to only about $10 billion / month

It would be great if we could get a CBO analysis of how much net additional revenue these tax breaks will eventually bring in because of their growth effects. I can think of few repugs I'd like to share that with.

[Cant trust em]

3. The effect on revenue through tax cuts is inconclusive at best

I've seen evidence to support both conclusions.

[JonQ]

14. Didn't a large percentage of those go to the poor and middle class?

I know I sorely needed the one I got.

[Cant trust em]

17. I'm not opposed to poor and middle class cuts, but...

we shouldn't be too surprised when revenues go down and the deficit goes up.

[kelly1mm]

4. Wait a minute - the deficit was 455 Billion in FY 2008

and for FY 2009 which includes from Oct 1, 2008 - Jan 20th 2009 as Ex-President Bush's last term and about 8 months of President Obama's first term it is going to be 1.8 Trillion! That can't be good. Does anyone have a estimate of what portion is attributable to Bush v. Obama and any numbers on the projected deficit for next year? This does not seem sustainable at all.

[PSPS]

5. It's not sustainable. But the banksters are doing OK and that's all that matters!

[kelly1mm]

6. That is $6000 per each of the 300 million americans

just for one year! I hope someone is doing alright because I can't afford to pay that back and I certainly hope that it does not continue in the future at that (or anything close to that) rate. I think DU needs to think of some solutions or else we are headed toward California style cuts in services.

[No Elephants]

7. Differences being (a) Bush cooked the books, including keeping the war off book; and (b) Dummya

did not come into office after the global economy was already in a black hole.


Do you think you're actually fooling anyone?

[kelly1mm]

8. Fooling anyone how so?

I don't want to see a situation like that which California just went through on a national scale - do you?

[No Elephants]

11. Your transparency has less than zero to do wih the future of the country, LOL.

[kelly1mm]

12. Maybe I am just dense but I don't understand

your comment. Could you explain it for me as I would really like to understand your position.

I do understand the mess that President Obama inherited and I would certainly expect that the deficit would be higher this year than last but I was not expecting it to be four times as large as the previous, record setting year. All I am trying to say is that this is a problem that needs a solution OR it will be used by the RW in 2010 and 2012.

I suppose a better measure of the deficit and how large it is would be as a percentage of GDP rather than raw dollar figures.

[ozone_man]

29. Problem is that Clinton signed a bill in 2000

that killed Glass Steagall, allowing banks to deal in unregulated derivatives. The Commodities Modernization Act of 2000. bush was just a bag holder for Clinton irrational exuberance of the 90's. Obama is a much bigger bag holder for Bush. It Democrats in collusion with Republicans. Very little difference as you can see, for example, from Goldman Sachs being Obama's largest contributor by employee. They own him. He should have nationalized them when he had the golden opportunity (last fall), instead of spending trillions of money borrowed from generations to come, to bail out bank share holders.

He may still have an opportunity to do something right, as we're a long way from bottom and abolishing the FED would be a nice start, as would nationalizing and splitting up these banks that are too big to fail. Change we would like to believe in, but not coming from Obama I'm afraid.

[Igel]

27. It's not sustainable.

In any event, you'll get no routinely acceptable numbers as to responsibility for the deficit this year. Or last year, for that matter.

Take TARP. It added $700 billion to the deficit, right? And it was all passed under Bush II's term--last October, in fact. Except that 1/2 of it was held by Congress and needed an additional vote before being released to the administration. Well and good, they were being responsible. Now, the money was released a couple of days before Obama was inaugurated. So it clearly falls under *'s term.

However, that second $350 billion was money that * said he wouldn't request unless Obama said he wanted it. Dem Congressional leaders and * both said that he asked for it, and one of the Congressional leaders said they were releasing it on Obama's behalf. So he wanted it, he asked for it, and dems gave it to * knowing that he wouldn't be spending it. Obama had the choice--ask for it or not ask for it; then he had the choice of using it or not using it. In fact, there was still money from the first "tranche" of TARP that was unused. Even more in fact, billions of last fall's disbursement of TARP money have been returned to the administration; if Obama deposits the money with Treasury then it reduces the amount issued by TARP and reduces the deficit, sort of undoing some of the damage. But he hasn't, instead new uses are being found for the money--maybe a good thing, maybe not, who am I to know? Net addition to deficit: $400 billion or so that Obama incurred but, under one method of accounting, can bear no responsibility for, but which, under a different method of accounting, he bears sole responsibility for. Of course, dem leaders are up to their navels in the allocation process, but we only talk about presidents when we talk deficits, as though the president's budget were enacted when he drew it up.

But we know that's not the case. In February of this year *'s final budget was finally passed. It meant that there were just continuing resolutions keeping part of the government going, which have the effect of simply maintaining the previous year's spending levels unchanged, while other bits of the government had their funding levels tweaked. Since the final budget was passed under Obama's administration, he had the ability to address it--but didn't. Do budget deficits approved under Obama by a Democratic Congress count towards his deficit total? No, because, well, * drew up the budget. How you put things under (R) and (D) is entirely up in the air, and almost certainly would say more about you than the actual events.

Then there's the stimulus defense. Any money spent as stimulus, to try to save the economy, is good. Tax cuts? Good. Increased spending for programs? Good. Increased infrastructure? Good. Every dollar spent is an additional dollar in the economy. Hence the February 2009 stimulus is wonderful, if not merely "good".

So take last year's budget deficit numbers. It was a record deficit, and, apparently, it was all because of *'s wars. But well over $200 billion of it was, um, stimulus--bad, evil stimulus money that was approved by far more dem Congressfolk than repubs, but signed into law by *. Wait a minute--*stimulus* money? Bad, evil stimulus money? But isn't all stimulus money all good? No, 18 months ago it was all bad, unless it fit DU prescriptions (not just "Democratic" prescriptions). Why, that faux stimulus was mostly tax cuts, of course. We can ignore that things only really fell apart a few months *after* the money was spent, and that coincided with some nasty banking weirdness.

So just try sorting out the differing moral and legal responsibilities in that mess, and then make sure that everybody can agree on your categorization. The partisan minefields are wide, deep, and packed with landmines with about 1/32" clearance between them--thermal expansion from just breathing on them can set them all off.

Ah, I see that it's after noon. Now, where's the beer? (Dang, still at the store.)

[unhappycamper]

9. $12 ~ $14 billion of that was used to keep the ocupations going. n/t

[saigon68]

10. And they contuinue to piss it away on "Military Adventures"

Like propping up our Puppet, "The Mayor of Kabul"

DISGUSTING

[kelly1mm]

13. While cutting that 12-14 B is noble and a great start

it is less than 1% of the 1.8 Trillion dollar projected deficit.

[Jennicut]

15. The Bush #'s were never real. Its not an increase so much as its the #'s being

accounted correctly for the first time. I posted this back a few months ago.

WASHINGTON — For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials.

The new accounting involves spending on the wars in Iraq and Afghanistan, Medicare reimbursements to physicians and the cost of disaster responses.

But the biggest adjustment will deal with revenues from the alternative minimum tax, a parallel tax system enacted in 1969 to prevent the wealthy from using tax shelters to avoid paying any income tax.

Recent presidents and Congresses were complicit in the ploy involving the alternative minimum tax. While that tax was intended to hit the wealthiest taxpayers, it was not indexed for inflation. That fact and the tax breaks of the Bush years have meant that it could affect millions of middle-class taxpayers.

If they paid it, the government would get billions of dollars more in tax revenues, which is what past budgets have projected. But it would also probably mean a taxpayer revolt. So each year the White House and Congress agree to “patch” the alternative tax for inflation, and the extra revenues never materialize.
http://www.nytimes.com/2009/02/20/us/politics/20budget.html?_r=1

[kelly1mm]

16. Thanks for the link - it suggests that

the "real" deficit under Bush was 270 Billion more per year than disclosed if you counted everything (2.7T over 10 years). That makes Bush's deficit around 725 Billion (for FY 2008) and Bush/President Obama's deficit a little more than twice that for FY 2009. Still not sustainable in the long haul but more in line with the economic realities of the past year. Thanks again for the link, it was very informative.

[Cant trust em]

18. There are a couple of additional factors in this

1. Decreasing revenue from fewer taxes being paid in the recession
2. Increased spending (ARRA, TARP, GM, Cash for Clunkers) that are being used to stabilize the recession

[kelly1mm]

19. Yeah - that is why I think the deficit doubling was more

in line with the economic realities of the past year. I do hope we can get this under control though. Just not sustainable in the long run.

[Cant trust em]

21. I agree. That's why health care reform is so important.

An investment to take overall spending down in the long-term.

That being said, I think that balanced budgets even if we have to cut services to get them. That and eliminating the Bush tax cuts for the weathy are needed.

[Winterblues]

20. Tax Revenues have been falling

Didn't Republicans insist that Tax Cuts be a part of the Stimulus Package and that they went to 97% of Americans? Cut Taxes and wonder why tax revenues are falling... Duhhhhh...

[WriteDown]

22. Here's the thinker though...

You could tax all income above 500K at 100% and it wouldn't come close to covering the deficit, so what is to be done?

[Winterblues]

23. I do not believe that is a true statement

Under Clinton taxes increased by only three percent for those earning over $250,000 per year and by his sixth year we were running a surplus and beginning to pay down ther National Debt. Granted the National Debt has more than doubled under Republican Rule it can be brought under control with good governance. Republicans don't understand that at all.

[WriteDown]

24. Projected surplus and actual surplus are two different things...

If spending remained identical then we could maintain surpluses. There was also the dot.com boom under Clinton. Those were great times and I hope they come back.

[Winterblues]

25. There was indeed actual Surplus

The last two years of Clinton's Term the US Budget was in Surplus. The National Debt was being paid down and the National Debt Clock was actually shut off for first time since Reagan. I am not talking about the "projected" trillion dollar surpluses over a ten year period. I am talking about the Actual Surplus for 1999 and 2000 Budgets.

[WriteDown]

26. No...

The budget was done on 10 year projections. It was a 10 year projected surplus. This does not take away from the prosperity of those times though.

[Yupster]

28. There was a surplus, but

the national debt actually went up each year because the surplus used the social security surplus to cover the deficit. That won't be possible much longer as the social security system is projected to go into the red in a few years.