Federal budget deficit sets March record $ 192.3B

 

Monday, Apr 13,2009, 4:01:04 PM   Click:

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WASHINGTON_The Treasury Department said Friday that the budget deficit increased by $ 192.3 billion in March, close to $ 1 billion only half of the fiscal year, the cost of financial bailout and mounting recession.

Last month, the deficit, a record for March, was significantly higher than the $ 150 billion expected by economists.

The deficit already totals $ 956.8 billion for the first six months of the fiscal year, also a record for that period. The Obama administration projects the deficit for the whole year is expected to reach 1.75 billion $.

A deficit at this level would almost quadruple the previous annual record of $ 454.8 billion last year. The March deficit was almost four times the size of the imbalance in the same month last year.

Nearly $ 300 billion to the nation, banks and other companies face the most serious financial crisis in seven decades has pushed government spending higher.

The Treasury said that compared to the end of March, $ 293.4 billion were provided to support companies through the $ 700 billion bailout fund Congress approved last October. This support has been provided mainly to banks, although the insurance giant American International Group Inc car General Motors Corporation and Chrysler LLC have also received assistance.

In addition to the bailout funds, Fannie Mae and Freddie Mac has received $ 46 billion last month, bringing the total assistance provided to mortgage companies to $ 59.8 billion dollars since October. The government has taken control of two last September, after suffering billions of dollars in losses on mortgages.

Through the first six months of the fiscal year that begins October 1, tax revenues totaled $ 989.8 billion, down 13.6 percent from the period a year ago. Government revenue has been greatly reduced by the recession, which is preparing to be the longest in the post-WWII period. The decline began in December 2007.


Public spending totaled $ 1.95 trillion in March, 33.4 percent more than last year period. In addition to higher payments for the performance of rescue, the government pays more in areas such as unemployment benefits and food stamps.

The Treasury report shows payments of unemployment benefit trust funds totaled $ 44.6 billion so far this fiscal year, an increase of $ 19.4 billion last year.

The Congressional Budget Office estimates that last month, President Barack Obama's budget proposals generate $ 9.3 billion deficit over the next decade, a figure $ 2.3 trillion higher than the estimates made in February in the administration of the first budget proposal.

The CBO review of budget deficits Obama would generate an average of almost $ 1 trillion per year over the decade ending in 2019.

The administration has said it remains confident of its forecast of lower deficits during this period can not be achieved. But private economists have blamed these estimates based on economic assumptions that they consider overly optimistic.

The administration projects that after reaching $ 1.75 trillion this year, the gap between expenditure and tax revenues will dip to $ 1.17 billion in 2010, plunging to $ 533 billion in 2013. If accurate, Obama, who fulfill the commitment to reduce the deficit he inherited by half by the end of his mandate.

Some economists have expressed concern that the huge deficit is expected to grow significantly interest rates, especially if foreign investors are concerned about the size of the United States deficit projections.

Lawrence Summers, director of Obama National Economic Council, said Thursday there was no indication that investors are increasingly concerned by the magnitude of the deficits. Rather, it said yields of Treasury securities have been driven by lower demand from investors seeking to maintain the treasury bonds as a safe haven in times of economic uncertainty.