Wednesday, August 12, 2009

July Budget Deficit $180.7 Billion

As all the world's eyes were stuck watching how the Federal Reserve will continue to placate any and all needs of the country, with their endless money trees we just had a report showing the July US budget deficit. Remember, today is "benefit-benefit" day at Fund My Mutual Fund so please don't worry about the costs, we don't do cost benefit analysis around here. Since no one else cares; I don't care anymore either. But I still like making predictions [Dec 16, 2008: 13 Outlier 2009 Predictions] Looks like my $2 Trillion Budget Deficit prediction is going to miss but I still am kicking the "experts" behinds. Two more months to go for the fiscal year, and $1.6-$1.7 Trillion should be in the bag. Here is what I said last December:

Consensus is that the United States will face it's first trillion dollar deficit in budget year 2009 (Oct 1, 2008 - Sep 30, 2009). That is excluding the war since we don't consider the war an expense but much like our banks an "off the balance sheet" accounting "figure". The largest postwar budget deficit has been $413B in 2008 (correction $459B); hence consensus says we are about to do 2.5x the largest previous record. I say it will be 5x the previous record and not only will we have our first $1 trillion deficit, fiscal 2009 will be so poor we will have a $2 trillion deficit.

For those 0.02% who still care about such things, the July figure is simply awe inspiring: $180.7 Billion. I'd ask you to hand this number to your child and ask him/her to annualize it. After all it is THEIR responsibility - adults get the benefits! (what a great system for adults) We've had entire years where $180B was the deficit. I will keep repeating this since people have become numb to what we are doing in this country. [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] [Jul 30, 2009: Cash for Clunkers a Bit Hit, Government Asks "What Can we Buy You Next?"] Going into this year (notwithstanding that we kept the war costs OFF the budget which understated deficits most of the decade) we never breached a $500 Billion yearly deficit. [Jul 28, 2008: US Budget Deficit to Half a Trillion] We can now do that in 1 quarter.

Anyhow back to enjoying the rally! All benefits, no costs! [May 29, 2009: In 1 year, US Taxpayer on the Hook for $55,000 More per Household]
  • 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. Excess of spending over revenue in July climbed to $180.7 billion the government spent more than in any month in U.S. history.
  • 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.
  • 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.
  • The Treasury also said that for the fiscal year to date it has spent $169.1 billion on the financial rescue plan called the Troubled Asset Relief Program, and $153.3 billion to purchase mortgage debt from government-sponsored enterprises including Fannie Mae and Freddie Mac, now in government conservatorship.
Boo Yah! Stock market is up so it's ok. Fannie Mae and Freddie Mac surging - thank you taxpayer. FHA next!

Now what I want you to watch next is as the "economy recovers" as "GDP surges" in Q3 2009, how tax receipts will not recover. Because GDP is now a figure to keep the peasants believing everything is great. The truth is in tax receipts.
  • Corporate tax receipts totaled $104.5 billion through July versus $246.8 billion, a decline of 58 percent, the Treasury’s budget statement said today. Individual income tax collections were down 21 percent so far this fiscal year to $750.4 billion compared with $943.9 billion in the year-earlier period.
We just talked about that last week [Aug 5, 2009: Federal Tax Revenue Plummeting] But don't tell that to CNBC which will proudly fist pump the positive GDP print we have coming in 3 months. Can you hear the green shoots? They are everywhere. Our leap to 100% debt to GDP is coming within 18 months.

[Jun 12, 2009: NYT - America's Sea of Red Ink was Years in the Making]
[Aug 7, 2008: I.O.U.S.A. Movie Trailer]
[Mar 26, 2008: Annual Spring Entitlement Warning Falls on Deaf Ears]
[Nov 23, 2008: David Walker in Fortune Magazine]
[May 23, 2008: David Walker on CNCB this Morning]

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