CBO Monthly Budget Review, April 2011
by Gary Therkildsen*, 4/12/2011
Last Thursday, the Congressional Budget Office (CBO) released its Monthly Budget Review (MBR) for April. If you've been keeping an eye on this blog, you'd know that the $830 billion deficit Uncle Sam has racked up over the first six months of fiscal year (FY) 2011 is unsurprising and isn't really newsworthy. Of course, that's not the way it's likely to play out in the media or on Capitol Hill.
Case in point: the Hill newspaper ran a piece announcing CBO's latest findings the day the MBR came out. Without providing any context, the paper's On The Money blog laid out the monthly figures, noting that the six-month deficit is up $113 billion over this time last year and government spending has similarly increased 11 percent over the same period.
Those figures might leave your average Hill reader pondering, "What could have caused such a significant increase in spending from one year to the next?" Actually, adjustments made last year to Troubled Asset Relief Program (TARP) accounts significantly reduced the government's spending totals, making this year's totals look abnormally high.
Taking into account last year's TARP write-downs, spending has increased less than one percent from this time last year. Unfortunately, congressional Republicans, like your average Hill reader, aren't likely to dig into the MBR to discover this information.
Indeed, the GOP is likely to latch onto the latest MBR "as fresh ammunition" in their "fight over government spending with their Democratic counterparts," disingenuously weaving it into their talking points during the upcoming FY 2012 budget debate.
The government's large deficit ... is supporting the economy right now. This spending is needed because the collapse of the housing bubble created a gap of more than $1.2 trillion in annual demand in the economy. Anyone who thinks that the government should balance its budget right now wants to throw millions more people out of work.
Right. It's literally that simple, as deficit spending helps to prop up a downturned economy. We're going to continue to see MBRs similar to April's, and we should.
Image by Flickr user johnsolid used under a Creative Commons license.