A Deficit For The Record Books
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Monday, the Department of Treasury released its most recent data on the current budgetary situation. In the month of February, the government ran a deficit of $232 billion dollars, making it the highest deficit on record. This brings the total deficit for fiscal year 2012, only 5 months so far, to $581 billion. Though February is historically a high deficit month due to tax refunds, this year’s drop in taxes taken in by the government and increased spending resulted in a record setting number.
Previous estimates had pegged the projected Fiscal Year 2012 deficit to be near $1.1 trillion dollars, but the Congressional Budget Office has released a revision that indicates they expect the deficit to top $1.2 trillion this year. The new amount is reflective of policies recently past in Washington, such as the payroll tax holiday extension that was passed in February.
The federal government continues to spend, but faced with large deficits of their own, state governments have managed to greatly reduce their spending and make real reforms. These reforms have resulted in decreases from overall deficits of $191 billion 3 years, ago to $47 billion overall today. The states cite major reforms to pension plans, healthcare for state employees, and increased efficiency in states’ organization. Gov. Jack Markell of Delaware says, “I think the new normal is that we are every single year going to have to be very much focused on wringing efficiencies out.” The Delaware Gov. just returned his state to a balanced budget after closing a $377 million dollar gap last year.
Most states have realized that stimulus dollars, once flowing from the federal treasury, have begun to stop and started to gradual process of trimming spending. Let’s hope Washington can learn from the states and start making meaningful reforms now.