WASHINGTON (AP) The government started the new budget year with an October deficit of $55.6 billion, up sharply from last year even though government revenues hit an all-time high for the month.
The Treasury Department reported Tuesday that the deficit for the first month in the new budget year was up 12.6 percent from the imbalance in October 2006.
The Congressional Budget Office is forecasting that the imbalance for the entire year will show an improvement from last year, when the deficit fell to $162.8 billion, a five-year low.
The CBO is projecting that the deficit for the current 2008 budget year will decline to $155 billion. But CBO is forecasting that deficits will begin to rise again in 2009, and some private economists are calling for the imbalance to start rising this budget year.
The 2007 deficit for the budget year that ended on Sept. 30 was 34.4 percent lower than the $248.2 billion deficit recorded in 2006, reflecting faster growth in government revenues than spending.
The Bush administration says the country is on track to accomplishing the president's goal of eliminating the deficit by 2012. But Democrats contend that even with the improvement in the deficit in recent years after an all-time high in dollar terms in 2004 the country's fiscal problems will start to worsen significantly with the impending retirement of 78 million baby boomers.
For October, revenues totaled $178.2 billion, up 6.3 percent from the same period last year. Government spending was up an even faster 7.7 percent to $233.7 billion, which was also a record for outlays for the month of October.
Part of the jump in spending this October compared with a year ago reflected the fact that last year's quirk of the calendar shifted some of the October payments into the previous month because Oct. 1 fell on a weekend. That timing shift did not occur this year so the outlays figure looked larger in comparison to October 2006.
The government's budget outlook has improved in recent years because of strong revenue growth, reflecting the expanding economy. While revenues have risen for four consecutive years, private economists are forecasting slower growth in revenues this year, reflecting the slowdown in the economy caused by a severe slump in housing.
Augustine Faucher, an economist with Moody's Economy.com, said he looked for the deficit for the current budget year to rise to around $200 billion. "Revenue growth has slowed dramatically as economic growth has softened," Faucher said.