Treasury says April federal deficit is largest on record for the month
The Treasury Department said Wednesday that the federal deficit for April soared to $82.7 billion, the largest imbalance for that month on record. That was significantly higher than last year's April deficit of $20 billion and above the $30 billion deficit that private-sector economists had expected.
The government generally runs surpluses in April, as millions of taxpayers file their income tax returns. But income tax payments were down this April, reflecting the impact of the recession, which has pushed millions of people out of work.
Total revenue for April was down 7.9 percent from a year ago, dipping to $245.3 billion.
The Obama administration forecast in February that the deficit for this year would hit $1.56 trillion, surpassing the record of $1.4 trillion set last year. Many private-sector economists think that this year's imbalance will be closer to the $1.4 trillion set last year and that deficits will remain high for years to come.
The trillion-dollar-plus deficits are being driven by the effects of the recession, which has cut government tax revenue while driving up spending.
Analysts estimate that roughly one-third of the increase in deficits over the past two years can be attributed to lost revenue -- the result of fewer people working and lower corporate profits. Another third was from increased government spending that normally occurs in a downturn, such as higher payments for unemployment benefits and food stamps. The final third reflects added government spending on the $787 billion stimulus bill and the $700 billion financial bailout.
Soaring deficits have become a political challenge for the Obama administration, which is promising to attack the budget deficits aggressively once the economy is stable and unemployment falls. President Obama has appointed a commission that is scheduled to produce a report by year's end on what spending cuts or higher taxes, or both, are needed to control future deficits.
Through the first seven months of the current budget year, which began on Oct. 1, the deficit totals $799.7 billion. That is down only slightly from last year's deficit of $802.3 billion during the same period.