October’s budget deficit bigger than the deficit for all of 2007

By Justin Fox | November 7, 2008 | +

The deficit for the 2008 fiscal year, which ended Sept. 30 was $455 billion, the Congressional Budget Office reported Friday. And the estimated deficit for the month of October? $232 billion!

That’s if you count the Treasury’s bank capital injections on a cash basis. Use the CBO’s present-value calculation and October’s deficit drops to $134 billion. That’s still kind of a lot.

Related Topics: Economy & Policy

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Ffred

Look for just as bad if not worse in the future. I just hope we get some actual infrastructure in return.
aflorzak

Fiscal year 2008 was the first time in history that the national debt increased by over $1 trillion in a single year (the federal budget deficit is only one, albeit large, part of that increase).

Total Public Debt Oustanding:

09/30/2008 $10,024,724,896,912.49
09/30/2007 $9,007,653,372,262.48

The government currently finances most of these deficits through the sale of bonds at auction, borrowing money from investors who might otherwise lend this capital to businesses and individuals to promote productive economic activity.

In other words, the government continues to vaccuum cash from the capital markets to fund its deficits, exacerbating the credit crisis. We need a sensible plan to refinance the national debt in order to free up the credit markets. Otherwise, the idea of a “bailout” is a non-starter, as it requires the government to borrow money (thus increasing the national debt) in order to lend it.
pneogy

aflorzak wrote: “…..In other words, the government continues to vaccuum cash from the capital markets to fund its deficits, exacerbating the credit crisis.”

I completely agree. Perhaps the government needs to raise taxes to finance its activities. Wait, that would ensure another Great Depression, wouldn’t it? Perhaps government should leave the capital markets to their own devices. Wait, wait, that would ensure another Great Depression again, wouldn’t it? I give up. Anyway, I’m sure government is the problem.