Deficit: Surplus in Dec., but not now

January 11, 2008 11:30:51 AM PST
The federal budget recorded a record surplus for December, but for the first three months of the budget year, the deficit is running significantly higher than the previous year.The Treasury Department reported Friday that the budget was in surplus by $48.3 billion last month, reflecting the fact that December is a month when quarterly income tax payments are made to the government. It was the largest surplus for any December on record.

For the first three months of the budget year, which began on Oct. 1, the deficit totals $105.5 billion, however. That was up 31.3 percent from the same period a year ago.

So far this budget year, revenues are up by 5.7 percent to $606.2 billion. But spending is rising at a faster pace, increasing by 8.8 percent over the same period in the 2007 budget year, to $653.9 billion.

The rise in spending reflects sharp increases in defense spending and in government health care spending.

The Congressional Budget Office and the Bush administration will in coming weeks provide updated estimates for the deficit for the current 2008 budget year, which runs through next Sept. 30.

The administraton's new forecast will be a part of the 2009 budget it will send Congress on Feb. 4. Last summer, the administration estimated that the 2008 deficit would be about $50 billion higher than the 2007 imbalance of $162.8 billion, which was a five-year low.

The Bush administration says its policies, if followed by the next administration, will return the budget to surplus in 2012. But many private economists are predicting the deficits will start rising in coming years, reflecting the on-going costs of war spending and higher costs for big government benefit programs such as Social Security and Medicare as 78 million baby boomers reach retirement age.

The deficit for this year could also be increased if the administration decides to urge Congress to approve an economic stimulus package to combat the weakening economy. Democrats who control both the House and the Senate are looking at their own stimulus package that could include such items as temporary tax rebates for individuals, extending unemployment benefits and boosting food stamp payments.

Bush is expected to make a decision on whether to push for a stimulus package around the time of his Jan. 28 State of the Union address.