On Friday, the Congressional Budget Office (CBO) released its Monthly Budget Review (MBR) for July. The review provides an assessment of the federal budget through the first ten months of fiscal year 2010. According to the CBO, we have racked up a roughly $1.2 trillion deficit so far, which is about $90 billion less than the deficit last year at this time.

Writing of the report in his blog, CBO Director Doug Elmendorf explains that the government has lowered spending related to the financial crisis – the Troubled Asset Relief Program (TARP), federal deposit insurance, and Treasury payments to Fannie Mae and Freddie Mac – but has boosted spending in other areas.

Those areas include spending related the American Recovery and Reinvestment Act (ARRA), unemployment benefits, and state Medicaid assistance. This is a continuing trend within FY 2010 spending.

Receipts have also continued to be a little higher than they were this time last year. This is mostly due to "[i]ncreases in net corporate income taxes and receipts from the Federal Reserve," which offset lower individual income and payroll tax receipts due to the downturned economy.

To fiscal conservatives that point to the current deficit and kvetch over the government being an out-of-control spending machine, I reference last month's post on the MBR:

As Congress' nonpartisan abacus, CBO can't and won't make any distinction between the different kinds of [aforementioned] spending...But it should be noted that [many] of those [increased] outlays were a very good thing indeed. [Boosted ARRA spending, along with increased] unemployment benefits, food and nutrition assistance, and the State Fiscal Stabilization Fund [have] all helped to ease the impact of the worst economic downturn since the Great Depression. You could even make the argument, convincingly I would add, that spending on [these] programs helped to keep the Great Recession from becoming a depression.

Moreover, further stimulus should not be out of the question. As Matt Yglesias noted this morning about the current economic environment and its openness to further debt:

In all cases, what’s relevant is not the debt but the cost of interest and the merits of the underlying proposition. In the case of the US government during a recession that features low interest rates, it makes tons of sense to borrow money in order to do things that are genuinely useful or that mobilize genuinely idle resources.

Image by Flickr user matthiasxc used under a Creative Commons license.