CBO has released its Monthly Budget Review for June. It finds that while the stimulus payments accounted for a $21 billion decline in monthly revenue (compared to last June), June's surplus would still have been lower than last year's when the rebates are accounted for. Details below.

The federal government incurred a deficit of $268 billion for the first nine months of fiscal year 2008, CBO estimates, $148 billion more than the shortfall recorded during the same period in 2007. About $79 billion of that change is due to the distribution to individuals of the tax rebates enacted in the Economic Stimulus Act of 2008. Compared with their level in 2007, outlays have risen by more than 6 percent, whereas revenues have declined by about 1 percent.

[...]

The surplus for the month this year was about $51 billion, CBO estimates, $23 billion more than the corresponding figure last year. The increase in the June surplus is largely attributable to certain one-time receipts and to differences in the timing of some payments. Adjusted for those factors, the surplus would have been lower than it was last June, even in the absence of rebate payments, which totaled $28 billion this June.

CBO estimates that net receipts were about $21 billion (or 8 percent) lower this June than they were in June 2007. Nearly all of the decline—$19 billion—can be attributed to payments to individuals of the tax rebates (in addition, an estimated $9 billion of those rebates was recorded as outlays).

CBO: Monthly Budget Review

Happy Fourth of July!
Just wanted to let our loyal BudgetBlog readers know we're going on a short hiatus next week. With Congress heading out of town for a short summer recess and the upcoming Fourth of July holiday next week, the Fiscal Policy team is heading out of town in order to escape the heat for some well-deserved vacation. This means, though, that the BudgetBlog will be dormant next week.

But don't despair. Craig and I will return in one short week on July 7 to continue to bring you all the news, gossip, information, and analysis on federal fiscal policy you've come to expect.

Hope everyone has a safe and festive Independence Day next week - be careful with those fireworks.

As this graph from the Current Population Survey shows, the recent rate of increase in the number of jobless workers -- which runs through March of this year and so does not include the surge in unemployment recorded for the month of May -- may signal an "official" recession. But don't tell the American people that.

Three-quarters of us say that we're in one already.

The Center on Budget and Policy Priorities has a helpful policy brief out today that runs through all the reasons the upcoming package of tax cuts -- popularly referred to as the "extenders" package -- should be offset. We couldn't agree with CBPP more. In their brief, they make four main points, the last of which is probably the most important:

• Congress should pay for the tax extenders, as its budget rules require.
• Arguments against applying PAYGO to the extenders bill do not withstand scrutiny..
• The offsets in the House-passed bill are reasonable policy.
• In the future, Congress should subject the extenders to greater scrutiny.

CBPP makes a great point with the fourth one on the list. There has not been any mention during debate on the extenders this year (or in any past year I can remember) that considered whether some of the provisions of the "extenders" package should continue to exist. House Ways and Means Committee Chairman Charles Rangel (D-NY) did mention during a committee markup that a comprehensive review of the package to determine which aspects were achieving their goals was necessary, but that review has not yet taken place. The popular name of the package itself -- the "extenders -- implies these tax policy provision will live on year after year without any review.

Hopefully while Congress tries to get its act together in order to go the extra mile and do a comprehensive review of the "extenders" package, they will at least do no harm and pay for the policies they want to extend wholesale.

The good folks over at the Congressional Budget Office (CBO) released their monthly budget review yesterday. Some highlights of the number crunching in the report are below:

The federal government incurred a deficit of about $317 billion during the first eight months of fiscal year 2008, CBO estimates, $168 billion more than the shortfall recorded through May of last year. About $50 billion of that change is due to the distribution to individuals of the tax rebates enacted in the Economic Stimulus Act of 2008. That amount is just under half of the total rebates expected for this year; most of the remainder will be disbursed during the next two months.

...

CBO estimates that the federal government recorded a deficit of $165 billion in May, about $97 billion more than the deficit recorded in May 2007. About half of that increase was due to rebate payments, which are recorded as either reductions in revenues or increases in outlays. (When a rebate exceeds an individual's federal income tax payment, the excess is classified as an outlay in the budget.)

...

Outlays were $174 billion higher than in the October-May period last year, far outpacing the $6 billion growth in net revenues...

The broad category of other programs and activities accounted for almost half of the increase in outlays through May. Spending for that category was up by 12.6 percent on an adjusted basis, reflecting an estimated $19 billion in rebate payments as well as double-digit growth in outlays for refundable tax credits, veterans' health programs, unemployment benefits, and food and nutrition services. Defense outlays have also grown rapidly in recent months, rising by 10 percent through May, compared with 7 percent in fiscal year 2007. Much of the growth this year has been driven by a 14 percent increase in spending for military operations, maintenance, and procurement, well above last year's average gain of 8 percent for those activities.

CBO: Monthly Budget Review

I just wanted to alert readers of a new blog we've been reading: EconomistMom - "where analytical rigor meets a mother's intuition."

Authored by economist and mom Diane Lim Rogers of the Concord Coalition, the blog's "particular focus [is] on the economics of fiscal responsibility," but Rogers also writes about broader issues.

She's been on a roll lately, explaining the trap of the "largest tax increase in history" rhetoric, expressing frustration about the 'extenders' tax cuts, and righteously high-fiving Steven Pearlstein for his column that connects the dots of the various economic woes of the day.

Good stuff.

Our friend Wesley Snipes looks like he is running out of options to avoid going to jail on June 3 for believing he was exempt from paying taxes (oh, and actually not paying taxes too). The Associated Press reports:

Wesley Snipes must surrender to prison authorities June 3 if he isn't granted bail to appeal three federal tax convictions, defense lawyers said in a court filing. Snipes' attorneys plan to argue before the 11th U.S. Circuit Court of Appeals that the trial judge erred in several ways before and after his February conviction. U.S. District Judge William Terrell Hodges last month sentenced Snipes to three years in prison.

To be granted freedom during the appeal, the 45-year-old actor must prove that he has a substantial issue to raise and isn't a flight risk. His attorneys argue that Hodges gave the jury bad instructions and should have granted them an expanded pretrial hearing on their request to move the proceedings.

Prosecutors said Snipes had no major issues to raise and has demonstrated he could flee. In a Monday filing, U.S. Attorney Robert O'Neill said Snipes told the probation office he had less than $10,000 in liquid assets, but the actor surprised the government by producing $5 million in payment for back taxes at his sentencing.

(h/t TaxProf Blog)

The state of state budgets continues to deteriorate around the country. The Center on Budget and Policy Priorities released another update yesterday to their increasingly disturbing analysis, which now shows that 31 states are anticipating budget problems in 2009, with 27 projecting a budget shortfall. We continue to reiterate that this is pretty bad news as state budgets are far less flexible than the federal budget and usually are legally prohibited from running a deficit. From the CBPP update:

31 states anticipate budget problems. Of those:

• 27 states and the District of Columbia faced or are facing $47 billion in combined '09 budget shortfalls. Arkansas and Michigan join this list.
  
• 2 states face '09 deficits, but have released no further information. (Connecticut joins this list. Louisiana and Michigan leave.)
  
• 2 other states project budget gaps for 2010 and beyond. (Connecticut leaves this list.)