U.S. Posts $65.4 Billion Deficit in March, but Revenue Rises
Economists surveyed by Bloomberg News economists had expected the U.S. government to post a $62 billion deficit in March, after a $220.9 billion gap in February and a $42.6 billion deficit in January. The March 2009 deficit was $191.52 billion.
The U.S. government also posted a record $1.42 trillion deficit in fiscal 2009, due mainly to the bank bailout and $787 billion fiscal stimulus package. That followed a $454.8 billion deficit in fiscal 2008.
Budget Surpluses Are a Memory
March's 18.6% year-over-year revenue increase represents a substantial improvement over February's 9.3% year-over-year rise.
The Obama administration forecasts a $1.41 trillion deficit for fiscal 2010, which began Oct. 1, 2009, and a $1.6 trillion deficit for fiscal 2011, which begins Oct. 1, 2010.
The U.S. government last ran a surplus during fiscal 2001, of $128 billion, in the last year of the Clinton administration. In George W. Bush's first year, Congress passed and Bush signed a roughly $1.1 trillion tax cut, which immediately created a $200 billion structural deficit. Increased spending for the Iraq and Afghanistan wars, and for the war on terror and the senior citizen prescription-drug program, subsequently increased the annual deficit to about $350 billion.
The key takeaways from the March report? The slightly larger-than-expected March deficit total was a bit of a surprise, but the key figure undoubtedly is the revenue trend. Revenue rose for the second straight month, on a year-over-year basis -- providing more evidence that a U.S. economic recovery is well underway (even if the National Bureau of Economic Research isn't ready to declare the recession over).
Further, while the U.S. budget deficit will likely require both difficult spending cuts and tax increases to return to balance in the decade ahead, better-than-expected revenue almost always makes the job of fiscal policymakers easier.