Red to Pink

I hope you’re sitting down for this.  Our nation’s budget deficit in August fell 13% on a year-over-year basis.  That’s right; we overspent by a mere $90.5 billion versus the $103.6 billion by which we were overdrawn in August of ’09.  Even the analysts were surprised; this was about $4.5 billion less than the consensus had estimated.

What did you get for the money?  The Defense Department, Social Security Administration, and Department of Health and Human Services (read Medicare and Medicaid) all did their part, and the entire government’s bill actually rose 2.2% when comparing this August to last. The decline in the overall deficit comes from an increase in revenue, apparently one a bit more real than the Federal Reserve remittances we discussed in our prior report, bringing receipts for this August to the second highest on record.  One source of this bonanza comes from corporate tax receipts which have soared 30% for fiscal year to date.  On the other hand, taxes collected from individuals fell $791.2 billion over the same period, underscoring how tough times are at the individual level.

The Congressional Budget Office figures our deficit to GDP ratio will shrink to 9.1% from ’09’s 65-year record high of 9.9%.  We’re still in the red and I’m almost tickled pink!  The improvement is being attributed to an economic recovery reportedly underway.  All those folks in Washington who want to keep their seats better hope it picks up steam in a hurry.