According to the CBO Budget Review, released yesterday: The federal budget deficit was about $107 billion in the first quarter of fiscal year 2008, CBO estimates—about $27 billion more than in the same period last year. Outlays have risen by 9 percent compared with their level in the first three months of [fiscal year] 2007, whereas revenues have grown by about 6 percent. The deficit increase is attributed to:

• a "drop in corporate profits": the deceleration in the growth of of overall revenue receipts on a year-on-year basis from roughly 7.5 to 5.6 percent and the five percent decrease in corporate tax receipts "probably reflects a drop in corporate profits that has occurred over the past year"
• a jump in government outlays of 8.9 percent across the board: total spending rose by about eight percent; "net interest on the public debt increased by 17 percent." Medicaid spending in the first quarter was up nearly 11 percent over the program's outlays in the first three months of 2007.

These figures represent the first sign that the national economic slowdown is having an impact on the federal deficit. And it is even having an impact on President Bush. On December 29, he said: ... even with high oil prices and softness in the housing market, we're still growing. In November, our economy added jobs for the 51st straight month, making this the longest period of uninterrupted job growth on record. Unemployment is a low 4.7 percent. Exports are up. And the fundamentals of our economy are strong. Yesterday, Bush said: Last Friday we learned ... that our jobs are growing at a slower pace and that the unemployment rate ticked up to 5 percent. A mixed report only reinforces the need for sound policies in Washington, which do not create more regulation and more lawsuits... The smartest thing we can do is to keep taxes low. The current condition of the economy, and Bush's likely response to it (in unison: tax cuts!) can be expected to exacerbate the federal budget imbalance and add still more to the nation's $9 trillion debt.