Figures released Friday reveal a weakening financial situation for the US government, with the 2008 fiscal years' first quarter deficit rising 31.3%.
The cumulative deficit for the October-December period increased to $105.64 billion from $80.4 billion for the same period a year earlier.The slowing economy led to a slower growth in receipts which fell below increased spending, the Treasury department said.
Analysts expect the deficit for the whole year to widen to over $200 billion from $163 billion in the last fiscal year ending September 30th 2007.Deficits had peaked out at $413 billion in 2004 and had been steadily declining since then. The Bush administration had planned to eliminate deficits by 2012.
For December the Federal government has posted a $48.26 billion surplus, a record for the month. It is higher by about 15% from the surplus of $41.9 billion for the same month, last year. The December spending figure would have been higher, but because December 1st was a weekend, $17 billion in benefit payments were accounted for in November. Also, there was a Federal Communications Commission auction of $12.7 billion in advanced wireless licenses that was considered a reduction in outlay. Without these two special items the December surplus would have been lower by $30 billion to about only $18 billion, sharply lower than last year.
Total receipts for the first quarter of fiscal 2008 rose 5.7% from a year earlier to $606.21 billion, while spending rose 8.8% to $711.75 billion. Both receipts and expenditure were a record for a first quarter.
What is worrying is that this data comes when the Bush administration as well as members of Congress are discussing ways to revive a faltering economy, which could cost upward of $100 billion. Economists expect the deficit for the entire year to touch the $200 billion mark. If the economy does not revive soon it could increase all the way to $300 billion, they say.