The Treasury Department has released preliminary spending and revenue totals for the first half of the fiscal year showing a slight improvement in the deficit compared to the same period in FY 2009. However, it is too soon to know whether the trend will hold up. Much will depend on whether the April receipts show signs of economic recovery.
For the first six months of FY 2010, Treasury estimates that the government recorded a deficit of $717 billion. That would be $64 billion less than the deficit for the same period last year.
In March, the deficit was $65 billion, which is $126 billion less than in March 2009. Analysis by the Congressional Budget Office and other experts has suggested that the difference is largely due to revisions in the projected costs of the Troubled Asset Relief Program (TARP) and the fact that last month had one more business day than March 2009.
In a hopeful sign, revenues were up in March for the second month in a row compared to 2009. On the other hand, outlay totals show the continuing effects of the recession. Two major safety net programs, unemployment compensation and Medicaid, continue to show high year-over-year growth.
Traditionally the administration does not officially revise the deficit projections in the President’s budget until the Mid-Session Review, which is typically released in the summer.
Even if the administration's projections were revised, deficits are still likely to continue at record levels that are fiscally unsustainable over the long-term.