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Deficit streak ends: Obama sees first monthly surplus
The federal government broke its record-long deficit streak in April, recording its first monthly surplus since the financial collapse at the end of the George W. Bush administration in 2008, according to preliminary figures Monday from the Congressional Budget Office.
Boosted by better tax collections and slightly slower spending, the government notched a $58 billion surplus in April. That’s nearly a $100 billion turnaround from the previous year, when the government ran a $40 billion deficit in the same month.
It is the first monthly surplus under President Obama, and comes 40 months into his tenure.
The numbers suggest that the government’s short-term fiscal picture has improved slightly since the deepest days of the recession, when stimulus spending and tax cuts splashed red across the federal budget.
Until April, the government hadn’t run a surplus since September 2008, which is just when the Wall Street collapse began to pound the economy and place heavy demands on the federal budget. Before that streak of 42 months, the government had never gone even a single year without recording at least one month of surplus for as far back as 1980, when the records begin.
April marked the seventh month in fiscal year 2012, and through that point the deficit stood at $721 billion — substantially below the $870 billion figure recorded at the same point in 2011.
The CBO’s analysis said spending on defense, education, Medicaid and unemployment benefits have all fallen this year, while Social Security spending is up.
The nonpartisan budget agency also said tax receipts are 6 percent higher than last year at this point — though in a worrisome sign, that’s still $20 billion below what the agency had projected in March.
The CBO releases a preliminary estimate each month. Final figures should come later this week from the Treasury Department.
This afternoon the CBO reported a number that in itself is quite remarkable: in April, a preliminary estimate of US receipts and outlays showed that the US Treasury posted its first budget surplus in 42 months, or since September 2008.
At $58 billion, the surplus was nearly $100 billion more than the the $40 billion deficit from a year earlier. Unfortunately, while superficially this number would have been worthy of praise, digging underneath the surface as always reveals 'footnotes'.
Sure enough, in the aftermath of February which saw a record US deficit of $232 billion and March's $198 billion in net outlays, there was a "catch." As the CBO admits: "This April, the Treasury realized a surplus of $58 billion, CBO estimates, in contrast with the $40 billion deficit reported for the same month last year.
The results in both years were influenced by timing shifts of certain payments; adjusted for those shifts, the surplus in April 2012 would have been $27 billion, compared with a deficit of $13 billion in April 2011.... The federal government incurred a budget deficit of $721 billion in the first seven months of fiscal year 2012, $149 billion less than the shortfall reported during the same period last year.
Without shifts in the timing of certain payments, however, the deficit so far this year would have been only $92 billion smaller." In other words, without various temporal adjustments, the April surplus of $58 billion would have been completely netted out by the cumulative $57 billion in deficit time shifts.
However, in an election year, every beneficial item such as this is an extended talking point as the president will gladly take the praise for a number which is indicative of anything but the underlying US financial "health." After all, others can bother with the explanations.
There is more: the April receipts of $319 billion were a near all time record, and $30 billion more than last year, again driven by the temporal vagaries of tax return season, and a big drop in tax refunds handed out.
Sadly, this number is very much unsustainable as the end of tax season year after year sees a dramatic plunge in receipts. Furthermore, while cumulative receipts are running at about 6% higher compared to the prior year, they are $20 billion less than the CBO's own estimate for where revenues would have been at this point as of March. In other words, enjoy the surplus while you can: for another 30 or so days.
Finally, confirming the outlier nature of the surplus, the Treasury did not take any respite in funding its future liquidity needs, and raised a total of $110 billion in cash, proving that sadly the April number is anything but sustainable, especially with a surge in short-term debt maturities that will need to be funded.
