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U.S. racks up debt at slower rate

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- The U.S. government is racking up debt at a slower pace than last year, according to Treasury Department figures released Monday.

In the first six months of the fiscal year, the U.S. government fell $717 billion further into the red, the Treasury Department reported Monday, including a $65.4 billion deficit in March. That means the deficit for fiscal 2010, which started in October, is down 8% from $781.4 billion in the same period last year.

Despite posting better numbers this year, the Treasury Department is still forecasting that the deficit will hit $1.56 trillion this year, up from the record $1.4 trillion losses posted last year.

The increase in expenses for the year could come from the jobs bill, extended unemployment benefits and other stimulus spending, said Robert Bixby, executive director for the Concord Coalition, a federal budget watchdog group.

In the mean time, the better monthly numbers are good news, but not great either, Bixby said. March this year had an extra business day than last year, which adds to government revenue. The government is also taking in more money from bailed-out companies who are repaying their Troubled Asset Relief Program funds.

"It's not a sign of some sort of wonderful buoyancy," Bixby said. "It's just a re-estimate of what TARP is going to cost."

March's shortfall, the 18th consecutive monthly deficit, was down from the $191.6 billion in the red posted a year earlier. Just before the start of the financial crisis in September 2008, the government reported a monthly gain, which reduced its overall debt by $45.7 billion.

Receipts in March were approximately $153.4 billion, up from $128.9 billion in March last year, and outlays were about $218.7 billion, down from $320.5 billion.

Meanwhile, for the six-month period, the government collected fewer taxes both from corporations and individual taxpayers. Revenue from individual taxes is down 8% and revenue from corporations is down 4% over the same period last year.

Economists will be watching April's numbers closely, when they are released next month. April is traditionally a big surplus month for the government because of the April 15th tax deadline, but the weak economy, TARP and stimulus spending contributed to a $20.9 billion deficit last year.

Earlier this year, President Obama signed a law that increased the government's debt cap to a record high $14.3 trillion. As of Thursday, U.S. debt subject to that limit totaled $12.8 trillion. To top of page

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