Great news: America sets another new record for monthly deficit spending
posted at 6:15 pm on March 12, 2012 by Steve Eggleston
A mere year after the federal government set a record for monthly deficit spending, with a $223 billion deficit in February 2011, and 6 months after Congress “cut” all the spending it could, it set a new record monthly deficit of $232 billion in February 2012″
The federal government set a new monthly record deficit of $232 billion in February and has notched a total of $581 billion in the first five months of the fiscal year, according to the Treasury Department’s official count released Monday.
February’s record is $8 billion more than the previous monthly record, set in February 2011, and came chiefly because of a drop in individual income tax receipts.
It was actually a leap-year-related increase in refunds, from $53.3 billion in 2/2011 to $80.9 billion in 2/2012. That overwhelmed an increase in gross individual taxes paid, from $91.6 billion to $102.4 billion.
On the spending side:
On the other side of the ledger, spending was down from $1.51 trillion to $1.47 trillion. Low interest rates continue to help the government’s fiscal picture, but last year’s spending cuts also appear to be taking effect, with slight drops in nearly every major category of spending.
There’s two bits of bad news on that. First, the Congressional Budget Office effectively debunked the idea that spending is down, saying that is a result of a shift in the timing of certain payments. The CBO also noted that without the shift of those payments, the 5-month deficit would have been closer to $600 billion.
The bad news on the low interest payments comes from The Wall Street Journal‘s editorial board:
The Congressional Budget Office (CBO), for example, forecasts that in the period 2014-2017 the average rates on three-month Treasury bills will rise to 2% from less than 0.1% today. CBO expects average rates on 10-year Treasury notes to climb to 3.8%, from 2.03% now. CBO adds that every 100 basis-point rise in government borrowing costs over the next decade will trigger almost $1 trillion in new federal debt.
The WSJ goes on to state that 52% of the publicly-held portion of the debt, or roughly $5.6 trillion, will mature in the next 3 years. That will need to be refinanced at what is presumably going to be a significantly-higher interest rate.
On a related front, the total public debt was $15.517 trillion as of Friday. That is an increase of $4.890 trillion since President Barack Obama took office, and a mere $8.9 billion less than the increase in debt during both of President George W. Bush terms. Back in August, Jim Geraghty predicted the two numbers would be equal on the Ides of March. It’s looking like the Ides will be a bit early this year for what is increasingly looking like The $6 Trillion (In New Debt) Man.
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