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Monthly Budget Review [i] (2009)

handle is hein.congrec/cbo1059 and id is 1 raw text is: Based on the Monthly Treasury Statement for November and the Daily Treasury Statements for December January 8, 2009 CBO estimates that the Treasury Department will report a federal budget deficit of $485 billion for the first quarter of fiscal year 2009, $378 billion higher than in the same period last year. That figure includes estimated net outlays of $245 billion for the Troubled Asset Relief Program (TARP). Although the Treasury is recording most spending for TARP on a cash basis, CB O believes that the budget should record the program's equity investments on a net present value basis adjusted for market risk, as specified in the Emergency Economic Stabilization Act of 2008. Using that approach, CBO estimates that outlays of $64 billion should be recorded for TARP through December, resulting in a deficit of $303 billion for the first quarter of fiscal year 2009. The discussion below focuses on the budget figures as they are being reported by the Treasury. CBO's most recent budget projections for fiscal year 2009 and subsequent years can be found in the Budget and Economic Outlook: 2009 to 2019, which was released on January 7, 2009. ESTIMATES FOR DECEMBER (Billions of dollars) Actual Preliminary Estimated FY2008 FY2009 Change Receipts 277 238 -39 Outlays 229 321 92 Surplus/Deficit (-) 48 -83 -131 Sources: Department of the Treasury; CBO. CBO estimates that the Treasury will record a deficit of $83 billion for December. In the previous three years, the government has run a surplus in December because of the receipt of quarterly corporate income tax payments; however, this year, lower receipts and higher outlays result in a $131 billion shift from surplus to deficit, compared with December 2007. CBO estimates that federal revenues in December were $39 billion, or 14 percent, lower than those in December 2007. The decline was especially pronounced in receipts of corporate income taxes, which fell by $35 billion, or about 41 percent. That is the biggest drop in those receipts for a major quarterly payment month since the recession began about a year ago. Lower corporate receipts reflect the recession's continuing toll on taxable corporate profits. Withholding for individual income and social insurance (payroll) taxes declined by about $7 billion, or 4 percent, in December; the decrease would have been greater if December 2008 had not had two extra business days. The reduction in withholding indicates that wages and salaries fell, presumably reflecting substantial declines in year-end bonuses and higher unemployment. Outlays in December were $92 billion (or 40 percent) greater than those in the same month last year. Adjusting for calendar-related timing shifts, the difference would have been $72 billion (or 30 percent). Outlays of $53 billion for TARP make up most of that increase. Adjusted for timing shifts, net outlays for programs other than TARP have grown by $19 billion (or 8 percent). Spending for defense rose by $9 billion, Medicare by $7 billion, unemployment benefits by $4 billion, Social Security payments by $3 billion, Medicaid by $2 billion, and other programs by $6 billion. Those increases were partially offset by a $9 billion decrease in payments of net interest on the public debt and by a $3 billion decline in net outlays of the Federal Deposit Insurance Corporation. BUDGET TOTALS THROUGH DECEMBER (Billions of dollars) Actual Preliminary Estimated FY2008 FY2009 Change Receipts 606 548 -58 Outlays 713 1,032 319 Deficit (-) Treasury Basis -107 -485 -378 CBO Estimate -107 -303 -197 Sources: Department of the Treasury; CBO. CBO estimates that the Treasury will record a deficit of $485 billion for the first quarter of fiscal year 2009, more than four times the $107 billion deficit recorded in the first three months of fiscal year 2008. Note: Unless otherwise indicated, the figures in this report include the Social Security trust funds and the Postal Service fund, which are off-budget. Numbers may not add up to totals because of rounding. MONTHLY BUDGET REVIEW Fiscal Year 2009 A Congressional Budget Office Analysis

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