[StBernard] New Record Monthly Deficit 37 Months into Obama's Presidency

[Westley Annis]

New Record Monthly Deficit 37 Months into Obama's Presidency
    
Posted by Daniel Horowitz (Diary)
Monday, March 12th at 10:49AM EDT

Here's a headline you won't see in the media this week: we incurred the
largest monthly deficit on record in February.

Seven months into a government "reined in" by the Budget Control Act, we are
supposed to be reaping the benefits of budget reduction.  Yet, according to
CBO, we incurred a gargantuan $229 billion $232 billion deficit in the month
of February.  The conservative Washington Times was the only publication to
note that this was the largest monthly deficit on record.  Keep in mind that
we didn't start accruing annual deficits of $230 billion until this past
decade.  The preliminary estimates from CBO projected outlays at $335
billion and revenues at $103 billion.  Our total deficit for the first 5
months of fiscal year 2012 is $631 billion ($869 billion in revenue; $1.5
trillion in outlays).

Think for a moment about what it means to spend $335 billion in 29 days.  It
comes out to $11.5 billion per day; $480 million per hour.  So the next time
Congress deliberates over a few billion in spending cuts over the course of
a month, remember that we will add several hundred billion more in debt
during the course of the debate.

What is so astounding about the record monthly deficit is that it comes
amidst a recovery in the job market and an overall increase in revenues.
Due to quirks in the scheduling of government payments, February is always a
bad month; nevertheless, even during the worst months of the recession, we
never suffered such a large budget deficit.  In February 2009, the monthly
deficit checked in at $193.8 trillion.  At a time when tax receipts are
increasing again (corporate tax receipts are up 56%), we should not be
racking up such high deficits.  Hence, it is incontrovertibly clear that we
don't have a revenue problem; we have a spending problem, most prominently,
an entitlement and welfare problem.


While some figures show spending for the year down a few points, that
reduction is entirely due to an accounting shift.  Most federal entitlement
payments are sent out on the first of the month; however, this year, October
1 (which was also the first day of the fiscal year) fell out on a Saturday.
As such, $31 billion of October's payments (accounting for 55% of this
year's "deficit reduction" and 92% of outlay reduction) went out on the last
day of September, thereby saving the new fiscal year from the extra
accounting burden.  So ultimately, we have not cut a dime in spending (even
before the record deficit set in February).  As CBO notes, spending has
actually gone up in some areas:

"In contrast, net payments to the government-sponsored enterprises Fannie
Mae and Freddie Mac increased by $11 billion, as compared with those in the
first five months of fiscal year 2011. Adjusted for timing shifts, outlays
for Social Security benefits and Medicare also were higher, by $14 billion
(or 5 percent) and $6 billion (or 3 percent), respectively."

Over the next few months, we're going to witness sharp debates over the FY
2013 budget resolution, the sequester, and the level of discretionary
spending.  While it is certainly important to reduce as much discretionary
spending as possible, it is clear that any budget deal that ignores
mandatory spending will do nothing to stop the record deficits.