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Government red ink jumps 25% in August
Question of the Day
The federal deficit surged nearly 25 percent in August to reach $753 billion through the first 11 months of the fiscal year, but the Congressional Budget Office said Monday it expects the final year-end total to be lower.
In August alone, the government ran a $146 billion deficit, pushing this year’s total up by nearly 25 percent in just one month. But CBO analysts said the picture will look somewhat better in September, the final month of the fiscal year, which will produce a surplus and drive the deficit lower.
This is expected to be the first year under President Obama that the federal deficit is below $1 trillion.
Indeed, at this point in 2012 the deficit was $1.164 trillion, or more than $400 billion more than it stands this year.
The CBO releases an early estimate of the government’s financial picture every month. Final statistics are released by the Treasury Department later in the month.
This year’s better budget picture is being driven from both ends: spending has dropped, thanks to the expiration of stimulus programs and limits Congress imposed on itself, but an even bigger factor is that taxpayers are paying more.
“Revenues have risen significantly, accounting for more than two-thirds of the decline in the deficit,” the CBO said.
Powered both by economic growth and by across-the-board tax increases that took effect Jan. 1, the government has collected $284 billion more so far this year.
Spending, meanwhile, is down $127 billion, and if that trend continues through next month it will mark the second straight year the government spent less than the previous year. The last time that happened was 1954 and 1955.
A major drop in spending came on defense programs, which the CBO said was due both to the drawdown of troops in Afghanistan and to the budget sequesters, which hit the military particularly hard.
The biggest drop, though, was to Fannie Mae and Freddie Mac, which actually returned about $82 billion to the federal government, and didn’t receive any payments from taxpayers.
On the other side of the ledger, Social Security, Medicare and Medicaid — the big entitlement programs — continued to grow steadily, by a total of $62 billion in 2013 alone. And the Agriculture Department spent $17 billion more than in 2012 thanks in large part to a drought that led to an increase in crop insurance payments.
Congress is grappling right now with the 2014 spending bills, which are due to be passed by the end of this month.
House Republicans have scheduled votes this week on a stopgap measure that would continue 2013 funding levels, but they are fighting a rebellion within their own ranks over what to do about the president’s health care law.
A number of Republicans have called on the House to include language defunding the law altogether, forcing Mr. Obama to choose between scrapping his signature achievement or risking a government shutdown.
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About the Author
Stephen Dinan can be reached at email@example.com.
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