To put some context on a new estimate that puts this year’s federal deficit at $1.8 trillion, consider this: That amount had never been spent by the federal government in a single year until 2000, let alone borrowed. That’s right. As the decade began, the US government spent $1.8 trillion in a year for the first time. Now it’s poised to spend that much in excess of its tax revenues. The Treasury released the latest figures Wednesday, showing spending of about $3 trillion in the past 10 months, and revenues of only $1.74 trillion.
With two months to go in the fiscal calendar, the Obama administration is projecting that the imbalance will end up totaling $1.84 trillion, more than four times last year’s record-high. The monthly deficit for July, also reported this week, came in a bit above what economists had expected.
The record red ink stems from familiar sources. The government is spending prodigiously on stimulus, to lift the economy out of recession, and on rescuing the financial system from a credit crisis. The cost of wars in Iraq and Afghanistan add to the tab. Meanwhile, in recessions tax revenues tend to fall, and this one is no exception. Government receipts were down about 6 percent in July from a year before.