- The Washington Times - Sunday, October 17, 2010

The federal deficit shrank slightly in fiscal year 2010, but on most other measures, it was a dark year for the government’s fiscal health.

Social Security’s basic trust fund paid out more than it received for the first year in decades, overall basic spending was up by 9 percent, and if it weren’t for money paid back by the end of the Wall Street bailout the deficit would have broken 2009’s record.

The government has now run a deficit for 24 straight months, reaching back to the end of the Bush administration. That streak is by far the longest period of red ink in Treasury statistics that go back to the beginning of the Reagan administration.

September’s deficit was $34.5 billion, and it brought the total deficit for fiscal year 2010, which ended Sept. 30, to $1.294 trillion — the second-highest total on record, behind 2009’s staggering $1.416 trillion figure.

Still, September’s shortfall was the lowest since April 2009, and while individual income- and payroll-tax receipts were down in 2010, corporate income-tax collections shot up dramatically. With stimulus payouts having peaked and begun to decline, the Obama administration predicted better times ahead.

“Thanks in large part to the tough decisions this administration made over the past two years, the economy is recovering, and we’re spurring economic growth and job creation,” Jeffrey Zients, acting director of the White House Office of Management and Budget, said Friday in announcing the final 2010 figures.

Mr. Zients said President Obama is committed to producing a budget that will try to cap non-security discretionary spending in 2012 — continuing a pledge he made for fiscal year 2011.

If that does happen, it would be a major break with last year.

Basic federal spending grew at 9 percent in 2010, according to the Congressional Budget Office, which said the rise was “somewhat faster than in recent years.”

“While families across our country continue to struggle to pay their bills, Democrats in Washington continue to spend and borrow at dangerous levels,” said Sen. John Thune, South Dakota Republican.

One major factor in the deficit jump was payments of interest on the national debt, which CBO, in a preliminary analysis earlier this month, said grew at 13 percent in 2010. As of Thursday, the country’s total debt stood at $13.607 trillion.

Treasury’s final fiscal year-end statement showed spending rose across a host of programs. Of 28 major departments or agencies that make up the government, 21 saw increased outlays in 2010.

The biggest jump came in the Education Department, which paid out $92.9 billion in 2010, or up nearly 75 percent from 2009. The Labor Department also saw a substantial jump of 25.1 percent to $172.9 billion. The Defense Department, meanwhile, grew by about $30 billion, to $666.7 billion — a 4.7 percent rise.

The seven departments or agencies that spent less were Housing and Urban Development, the Treasury, the president’s executive office, NASA, the Office of Personnel Management, military retiree benefits, and the Homeland Security Department — which saw a large drop in emergency disaster spending.

Meanwhile, Social Security paid out more than it took in this year, for the first time in decades. Receipts for the Federal Old-Age and Survivors Insurance Trust Fund were $540 billion — nearly $40 billion short of the $579.9 billion paid out.

Actual stimulus payouts grew dramatically, with education-related Recovery Act payments nearly doubling and highway spending more than quadrupling.

The $814 billion stimulus was signed into law in February 2009 but the rate of spending grew only gradually. Budget trackers say the spending peaked in the last six months and will now taper off fairly dramatically — though Congress and the White House have called for another round of stimulus spending.

Fueled first by the Wall Street bailout and then by the stimulus payouts, the government has run a deficit for every month beginning in October 2008. That 24-month streak is more than twice the previous record of 11 months, which was reached once under President George H.W. Bush and twice under President Reagan.

The monthly deficit streak is a measure of how consistently bad the country’s fiscal picture is. Even during the major deficits of the 1980s and early 1990s, the government would have occasional months in the black.

It’s not clear how bad fiscal year 2011 will look. The economy is still sputtering, but with certain tax breaks set to expire, the government’s revenue from corporate taxes should continue to grow.

On the spending side, though, the picture is unclear. Congress failed to pass a budget and has not adopted any of the 12 annual spending bills, and the government has been running on a stop-gap “continuing resolution” since Oct. 1.



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