In the Monthly Treasury Statement of Receipts and Outlays of the U.S. Government, the Treasury Department estimated that the first two months of fiscal year 2009 recorded a deficit of $401 billion. This two-month deficit will be almost as large as the entire 2008 deficit of $455 billion, with the current deficit representing a post-war record for a two month period. The Treasury recorded the deficit in November as $164 billion and $237 billion in October.
"Even in these times of record-breaking deficit spending, running a deficit of over $400 billion in just two months is simply staggering," said Maya MacGuineas, President of the Committee for a Responsible Federal Budget.
The Treasury's $401 billion deficit estimate is much higher in the first two months of the current fiscal year than the $267 billion estimate from the Congressional Budget Office (CBO). The Treasury accounts for costs associated with the Troubled Assets Relief Program (TARP) on a cash basis, while the CBO accounts for TARP costs on a risk adjusted present value basis, based on assumptions that assets purchased with TARP funds will be eventually resold and thereby generate revenues for the federal government in the future.
"Given the immediate dangers our economy faces, it is clear that some kind of stimulus is necessary and appropriate," said MacGuineas. "But no one wants to recover from the current crisis today only to stumble into the next economic crisis tomorrow, a crisis caused by trillion dollar deficits becoming the norm. We need to address the fiscal health of our nation, and soon."
The Committee for a Responsible Federal Budget is a bipartisan organization committed to educating policy makers and the public about issues related to fiscal policy. The Committee is located at the New America Foundation. Please visit www.crfb.org.