Deficits

December 17 - Yesterday, New York Governor David Patterson submitted to the New York State Assembly a state budget that contained between $4 to $6 billion in increased fees and taxes and $9 billion in spending cuts. Some provisions included in the budget proposal are increased fees on cell phone usage, digital content downloads, cigarettes, and non-diet beverages, and cuts in education and Medicaid spending. These provisions are designed to close the State's $15.4 billion budget shortfall, caused primarily by the economic crisis.

December 16 - Following the release of a Treasury document detailing $56 trillion in unfunded government liabilities, Representative Jim Cooper (D-TN) reiterated his support for a commission examining the long-term fiscal health of the federal government. The Treasury's Financial Report of the United States for 2008 showed trillions of dollars in unfunded liabilities for entitlement programs such as Social Security ($17 trillion) and Medicare ($32 trillion).

Maya MacGuineas, President of The Committee for a Responsible Federal Budget, called for a reform of entitlement programs, and warned that without such reforms "it's out of the frying pan and into the fire."

December 9 - The federal deficit will total more than $1 trillion dollars this year no matter how the Troubled Asset Relief Program (TARP) is treated in the budget, according to the Goldman Sachs US Economic Research service. Although analysts are still awaiting the U.S. Treasury's monthly statement on receipts and outlays, Goldman Sachs cites Congressional Budget Office (CBO) figures showing slumping revenues, asset purchases under TARP, and the government takeover of Fannie Mae and Freddie Mac as indicating an economic deterioration of $68 billion overall in the first two months of the current fiscal year. An excerpt from the report:

Although two months is usually a thin reed on which to base budget projections for the full fiscal year, the data to date strongly suggests that the deficit will easily surpass $1 trillion no matter how TARP assets purchases ultimately affect the calculation.

December 5 - The Congressional Budget Office (CBO) reported today that the U.S. government is currently running a record budget deficit. In the Monthly Budget Review, CBO estimates a Treasury figure of a $408 billion deficit for the first two months of fiscal year 2009 - a figure that includes $191 billion disbursed from the Troubled Assets Relief Program (TARP).

The deficit through November this year is $253 billion higher than the corresponding period in 2007. In addition to higher rates of government spending in social insurance, defense spending, the TARP, and the "other spending" category, the report also shows reduced receipts from individual and corporate income taxes.