The Congressional Budget Office released its Budget and Economic Outlook report this week and it included some stinging realities of the declining economic situation of the United States, particularly about the budget deficit.

For the month of July of 2008, the report indicates that the budget deficit grew significantly, in part from the $92 billion in tax rebates issued of the $168 billion economic stimulus package which the U.S. Congress authorized in February. Other contributing factors were less revenue from a decline in spending by consumers, and funds utilized by U.S. regulators covering the tracks of failed banks and thrifts as a result of the housing and credit crisis.
The Treasury Department reported that the deficit for July 2008 was $102.8 billion, nearly triple the July 2007 deficit of $36.4 billion. Spending by the government departments in July 2008 rose to a never before seen level of over 27% percent– a record of $263.3 billion from a year earlier, and revenue decreased nearly 6% percent to $160.5 billion.

The Federal Deposit Insurance Corporation contributed to the increased deficit amount, spending $15 billion in the month of July alone to cover insured deposits at failed banks and thrifts. Each depositor’s account is insured up to $100,000 per bank under FDIC insurance.

The Congressional Budget Office had projected a $102 billion deficit for the July period. This had included nearly $14 billion as a result of the tax rebate payments from the Economic Recovery Act of 2008.

Looking at the entire fiscal year, from October 1, 2007 to the present, the government’s spending, rebates, and a decline in tax revenue has been the basis for an accumulated deficit of $371.4 billion. The prior fiscal year when measured for the same period to date reflected a shortfall of $157.4 billion. Year-to-date spending totaled $2.466 trillion, and revenue totaled $2.094 trillion, the Treasury department indicated.
For the current fiscal year with just September remaining, the White House expects a $389 billion deficit, more than double the fiscal 2007 deficit of $163 billion and close to the top record of $413 billion, set back in 2004.

Departments involving the U.S. military spent 51.5 billion in July, up from $40.3 billion a year earlier, while spending by the Department of Health and Human Services totaled $62.4 billion, up from $44.6 billion a year earlier. Spending on Social Security totaled $55.1 billion, up from $49.1 billion a year earlier.

The U.S. Treasury department manages to finance this deficit via the sale of T-bonds, T-Notes, and T-Bills. In July, the department said that its borrowing requirements for the period from July to September of 2008 quarter would be $171 billion, $59 billion more than it predicted in April.