CBO Monthly Budget Review, February 2011
by Gary Therkildsen*, 3/10/2011
The Congressional Budget Office's (CBO) Monthly Budget Review (MBR) for February is out and it has piqued deficit hawks around Washington. The thing is, though, February's MBR is just like all the rest of CBO's recent monthly budget reports: it reveals that the country spent a lot more money than it took in over the previous thirty-day period.
That the MBR would show this makes sense when you consider that federal revenues are at a 40-year low. And it makes even more sense when you bear in mind that these low revenues are a direct result of the bursting of an $8 trillion housing bubble just two years ago, which left a shattered economy in its wake that is slowly beginning to show signs of life.
The Washington Times, possibly unaware of these factors, losses it marbles over CBO's latest monthly report, announcing, "U.S. sets $223B deficit record," likely eliciting the see-I-told-you-this-country-is-going-to-hell-in-a-handbasket response ostensibly sought from its conservative readership.
And while the article's title is truthful, the piece provides little context about the deficit figure, except to note that it "[d]warfs [the] Hill's cutting goals," in an effort, I suppose, to better frame the Republican Party's inarticulate spending cuts.
If one digs a little deeper into the MBR, though, it turns out that five months into the fiscal year Uncle Sam is running a $642 billion budget deficit, which is $10 billion less than the shortfall recorded this time last year. Importantly, this is part of a larger, positive trend. Writing in his blog, CBO Director Doug Elmendorf explains:
The government’s receipts have been growing on a year-over-year basis. Receipts in February were higher than the amounts collected in February 2010, CBO estimates, marking the 10th consecutive month of year-over-year increases. Prior to that period, in 22 of the previous 24 months, receipts had been lower than those in the same month the year before.
Of course, we're not likely to see MBRs much different from the one we just got, but that shouldn't be a surprise. Here's a hint for the Times and other deficit-hawk-friendly publications: quit peddling foreboding pieces over these budget reports.
Immediate deficits are not a problem. Our sputtering, jobless recovery is. In fact, because interest rates are so low, it actually makes sense for the government to borrow more money to invest in infrastructure – like roads, rail, broadband, and power grids – while the getting's good. It would also help lower our unemployment rate.
Image by Flickr user johnsolid used under a Creative Commons license.