Federal Debt Now $12.7 Billion, Nearing Statutory Limit

The Treasury Department released the statement of public debt as of March 31. According to the release, the national debt stood at $12.7 trillion. The statutory limit for public debt is set at $14.3 trillion, so the buffer is down to $1.6 trillion.

The Treasury’s report on the March deficit showed a shortfall of $65 billion with monthly receipts of $153.3 billion and outlays of $218.7 billion. In March 2009, receipts were $129.9 billion and outlays of $320.5 billion. The deficit for the month was $191.6 billion.

The Treasury said that lower-than expected costs of the financial bailout helped comparisons and improved last month’s numbers. TARP expenses were over estimated by $115 billion for March.

The bailout costs are a one-time change that will not be repeated as the year progresses. The February 2010 deficit was $220.9 billion. That is the highest monthly loss on records provided by Treasury in the budget analysis. The data goes back to 1980.

For the first quarter of 2010, the deficit was $329 billion compared to $448 billion in the same quarter a year ago. But, for the first quarter of 2008, the deficit was only $206 billion. In the same period in 2007, the deficit was $177 billion. The first quarter 2006 deficit was $184 billion.

First quarter deficits did not begin with the current Administration as many people would expect. The last time the federal government ran a large number of monthly surpluses was in the second half of 2000 and early 2001.

The largest shift in federal outlays and receipts is this sharp increase in outlays which would be expected with the recession’s effect on income and the cost of the stimulus packages. Total outlays in 2008 were $3.142 trillion, which rose to $3.513 trillion last year. The deficit per month is expected to average $300 billion per month, so the monthly level in the last three-quarters of the year will be closer to $400 billion a month as deficit spending grows. The budget for the entire year is still expected to reflect a deficit of $1.56 trillion.

Douglas A. McIntyre