Posted by Sada Mosler on 12th January 2008
Federal budget surplus for Dec. – but wait . . .
By Martin Crutsinger
WASHINGTON – The federal budget showed a record surplus for December, but for the first three months of this budget year, the budget deficit was running significantly higher than in the same period the previous year.
The Treasury Department reported yesterday that the budget was in surplus by $48.3 billion last month.
It was the largest surplus for any December on record.
The budget was boosted by higher quarterly corporate tax receipts and high individual tax withholdings because of year-end bonuses, according to Bloomberg News.
However, for the first three months of the budget year, which began Oct. 1, the budget deficit totals $105.5 billion – up 31.3 percent from the same period a year ago.
So far this budget year, revenue is up 5.7 percent to $606.2 billion.
Good indicator GDP is holding up.
But spending is rising at a faster pace, increasing 8.8 percent over the same period in the 2007 budget year, to $653.9 billion.
The rise in spending reflects sharp increases in defense spending and in government health-care spending.
Spending has dropped to a much lower growth rate for the previous two quarters, taking demand from the economy and keeping GDP lower than otherwise.
Now that spending is back up, it will provide more support for GDP into the elections.
This has happened in previous election years.