Government Deficit Expands To $176 Billion In October

According the monthly Treasury report released this afternoon, the Federal Government posted a $176.4 billion deficit in the month of October.  Total Government receipts came in at $135 billion.  Of that $61.2 billion was attributable to personal income tax, down roughly $25 billion from the same period last year.  There were net refunds to companies in October, with corporate income tax coming in at negative $4.5 billion, down from $81 billion in October of 2008.

Government outlays came in at $311.6 billion.  About 7.3% of that, or $22.83 billion went to interest on government debt.  In October of last year that number was 5.9%.  Social Security outlays were $65.2 billion, up slightly from the $59.15 billion posted last October.  Military expenditures were almost unchanged year over year, coming in at $67.75 billion.  The biggest increase was in the Department of Health and Human Services budget which was up nearly $10 billion from last year and represented nearly 30% of outlays in the month of October.  Much of that increase it attributable to rising expenditures on Medicare and Medicaid, which were up roughly $13 billion from October of last year.

Government Outlays and Receipts(Millions of dollars), January 2007 through October 2009

Since September of 2008, the U.S. budget has been consistently in deficit.  Recessions typically put unusual strain in the Federal budget.  With personal income declining as unemployment rises and corporate profits shrinking, Government tax receipts enter a states of state of decline.  Swelling unemployment also drives more people to rely on Government programs to support themselves.  This can be seen very clearly in the increased outlays on Medicare and Medicaid highlighted above.  Large deficits are acceptable in the short run if Government outlays created conditions in which future tax revenues will be enough to repay debt.  If, however, current government outlays are not sufficiently large we may see the percent of the budget that debt payments represent rise indefinitely.

Garrett W. McIntyre