Federal spending tops $3 trillion

Federal spending surpassed the $3 trillion mark for the first time in history during July, and the record-shattering fiscal year still has two months to go.

The U.S. government spent more money last month - $332 billion - than in any other month in history, the Treasury Department reported Wednesday. Outlays were more than double tax receipts in July, generating a monthly deficit of $181 billion.

For the first 10 months of fiscal 2009, which ends Sept. 30, the budget deficit totaled $1.27 trillion, nearly three times last year’s record annual deficit of $459 billion.

As government spending has soared this year to battle the worst recession since the Great Depression, tax revenues have plummeted. Corporate income tax revenues plunged 58 percent during the first 10 months of fiscal 2009 compared with last year. Individual income tax revenues are down more than 20 percent, or nearly $200 billion, to $750 billion.

On the spending side of the ledger, the government expects its outlays so far for the Troubled Asset Relief Program, the bank-bailout effort, will cost taxpayers $169 billion. Through July, taxpayers have funneled another $85 billion to Fannie Mae and Freddie Mac, the insolvent mortgage-financing giants taken over by the government in September.

The deep recession has increased demand for government safety-net programs, whose spending has soared in response.

Federal grants to the states for Medicaid, the health care program for the poor, hit $210 billion through July, $40 billion higher than last year. Outlays for the food stamp program have increased 39 percent, or $12.6 billion, to $45 billion so far this year.

Spending from the Unemployment Trust Fund totaled $93 billion through July, 55 percent above the year-earlier level. The economy has shed 6.7 million jobs since the recession began in December 2007, and the Labor Department estimated earlier this month that 14.5 million would-be workers were jobless in July.

The Congressional Budget Office has projected a budget deficit of $1.83 trillion for fiscal 2009. But that figure includes a $250 billion “placeholder” for additional bank-bailout funds, which Congress never approved, and the expectation that stimulus money would be going out the door faster than it has, said Diane Lim Rogers, chief economist of the nonpartisan Concord Coalition, a budget-watchdog group. So, the likely deficit this year will be significantly lower than projected, she said.

“We have shifted some of the stimulus money into the next fiscal year, and that means that anticipated deficits in the future will be worse than expected,” Mrs. Rogers said.