Wait, I thoughtChimpy’s tax cuts were supposed to lead to increased revenues.
The government started the new budget year with an October deficit of $55.6 billion, up sharply from last year even though government revenues hit an all-time high for the month.
The Treasury Department reported Tuesday that the deficit for the first month in the new budget year was up 12.6 percent from the imbalance in October 2006.
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The CBO is projecting that the deficit for the current 2008 budget year will decline to $155 billion. But CBO is forecasting that deficits will begin to rise again in 2009 and some private economists are calling for the imbalance to start rising this budget year.
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For October, revenues totaled $178.2 billion, up 6.3 percent from the same period last year. Government spending was up an even faster 7.7 percent to $233.7 billion, which was also a record for outlays for the month of October.
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The government’s budget outlook has improved in recent years because of strong revenue growth, reflecting the expanding economy. While revenues have risen for four consecutive years, private economists are forecasting slower growth in revenues this year, reflecting the slowdown in the economy caused by a severe slump in housing.
Augustine Faucher, an economist with Moody’s Economy.com, said he looked for the deficit for the current budget year to rise to around $200 billion. “Revenue growth has slowed dramatically as economic growth has softened,” Faucher said.