Seeing Red (Ink)
While we wait for the finalized deficit numbers from the Treasury Department, what we already know about the results of the past fiscal year should be enough to make anyone sick.
The Congressional Budget Office last week estimated that Uncle Sam’s deficit for the fiscal year that ended on September 30 was “about $1.4 trillion.” You know that things are out of control when the word “about” precedes a figure so large that only goes out to one decimal point.
That $1.4 trillion is more than triple last year’s deficit of $455 billion and almost nine times the $162 billion recorded in the fiscal year that ended on September 30, 2007.
Well over half of the “about” $945 billion increase in the reported deficit ($1.4 trillion less $455 billion), or roughly $520 billion, is due to decreases in receipts from economic activity:
On a quarter-by-quarter basis, the decay in collections has mostly accelerated. Here’s the year-over-year change in receipts from economic activity by quarter for the past two years:
- +5.7% -- Quarter ended December 31, 2007
- –1.4% -- Quarter ended March 31, 2008
- +5.1% -- Quarter ended June 30, 2008
- –2.8% -- Quarter ended September 30, 2008
- –9.3% -- Quarter ended December 31, 2008
- –18.0% -- Quarter ended March 31, 2009
- –30.9% -- Quarter ended June 30, 2009
- –16.2% -- Quarter ended September 30, 2009
You might think that the September 30, 2009, results are cause for cheer. Think again:
These results, based on looking at the sum of all daily receipts and refunds during the two quarters, show that serious current shortfalls have spread to the “withheld” category. By stark contrast, withheld income and employment taxes were actually 2.8% higher during the September 30, 2008, quarter than they were in the same quarter of 2007.