Is the U.S. entering a fiscal funding crisis?
*Bloomberg, by Rebecca Christie & Peter Cook, August 12, 2009
“The U.S. budget deficit reached a record for the first 10 months of the fiscal year and broke a monthly high for July as the recession curbed revenue and the government ramped up spending to rejuvenate the economy.
The shortfall so far for the fiscal year that ends Sept. 30 totaled $1.27 trillion compared with a $389 billion year-to- date gap in 2008, the Treasury said today in Washington. The excess of spending over revenue for July climbed to $180.7 billion compared with a $102.8 billion gap in July 2008 as the government spent more than in any month in U.S. history.
Tax receipts are sliding and spending is surging even as some economists say the recession may have ended. The government is trying to spark business and consumer spending through a $787 billion stimulus plan spanning tax cuts, infrastructure projects and a goal to create or save 3.5 million jobs. President Barack Obama also is pushing a health-care overhaul that may cost $1 trillion over a decade.
‘Spending is bound to increase as the year goes along’ and money from the stimulus package is distributed, said Stan Collender, managing director of Qorvis Communications in Washington and a former U.S. House and Senate Budget Committee analyst. ‘That’s good news given the state of the economy. You want to do that, to get the recovery going.’
Spending for the month of July rose 26 percent from a year earlier to $332.2 billion, while revenue fell 6 percent to $151.5 billion. Because Aug. 1 was on a weekend, many payments due at the start of the month were disbursed in late July, boosting outlays by about $25 billion, Treasury said.
For the fiscal year that ends Sept. 30, the Office of Management and Budget forecasts the deficit will reach a record $1.841 trillion, more than four times the previous fiscal year’s $459 billion shortfall.”
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