December deficit nearly doubles

By Blake Ellis, contributing writer


NEW YORK (CNNMoney.com) -- The U.S. government posted a deficit of $91.9 billion in December, nearly double the shortfall of a year earlier and marking the government's 15th straight month in the red, the Treasury Department reported Wednesday.

The shortfall brings the total deficit for the first quarter of fiscal year 2010 to $388.5 billion, up from $332 billion during the same period last year.

It was the second consecutive December the government spent more than it took in. In December 2008, the deficit was $51.8 billion.

While December's deficit was less than the $120.3 billion in November, that's no reason to celebrate. The government typically rings up a surplus in December as year-end bonuses boost high individual withholding and as companies make quarterly income tax payments.

The deficit remained high in the first three months of the fiscal year because while spending was down by $3.6 billion from the same period last year, tax revenue fell even more, dropping by $59.7 billion as individual income and payroll taxes declined.

Interest paid on the debt in December was $104.6 billion -- 34% of federal outlays for the month.

"No surprises, the government obviously continues to run a very large deficit," said Gus Faucher, director of macro economics at Moody's Economy.com. "But that's necessary as a response to the recession and the financial crisis."

The Treasury estimates the annual deficit will climb to $1.502 trillion for the full fiscal year 2010, up from $1.42 trillion in 2009.

Debt ceiling: For the long term, many economists are less concerned about monthly and annual deficits, focusing instead on the enormous accumulation of national debt and its rapid upward trend.

"We want to have a big deficit now because that's helping to stimulate the economy, said Faucher. "The concern is about the longer run."

That's especially true after Congress raised the debt ceiling again. The new limit for the amount of debt the Treasury is allowed to have, passed in the last days of 2009, was set at $12.394 trillion, up $290 billion from the previous level of $12.104 trillion. Depending on the state of the economy, this should provide the government relief until mid-February.

As of Monday, the country's total public debt was $12.285 trillion, $109 billion below the debt limit. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play

Search for Jobs

Index Last Change % Change
Dow 18,203.37 -85.26 -0.47%
Nasdaq 4,979.90 -28.20 -0.56%
S&P 500 2,107.78 -9.61 -0.45%
Treasuries 2.12 0.04 1.82%
Data as of 6:03pm ET
Company Price Change % Change
Bank of America Corp... 16.04 0.03 0.19%
Apple Inc 129.36 0.27 0.21%
Ford Motor Co 16.17 -0.40 -2.41%
Cisco Systems Inc 29.54 -0.65 -2.15%
Microsoft Corp 43.28 -0.60 -1.37%
Data as of 4:02pm ET
Sponsors

Sections

The historically black school will cover 50% of the cost of a a student's final semester if they graduate early or on time, starting next year. More

Meet the FREAK bug. Old U.S. export controls on data encryption has come back to haunt us in the form of a nasty computer bug. More

In Buffalo, New York, the city is selling vacant homes for a $1 to those who are willing to fix them up and live in them for a few years. But as many buyers soon find out, the cost to renovate these super cheap properties can quickly add up. More