Uncle Sam collecting less while the economy grows

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Opinion Zone,Tom Blumer

The federal budget deficit in May 2010 wasn't as bad as May 2009.

As seen in the most recent Monthly Treasury Statement, the May 2010 deficit of $135.9 billion came in about 28% lower than the $189.7 billion shortfall that occurred during the preceding May.

In his report on the results Thursday afternoon, the Associated Press's Martin Crutsinger made a good point when he wrote: "Much of that improvement reflected calendar differences which boosted receipts and lowered government benefit payments for the month."

On the outlays side, May 2010 had only four Fridays, when Uncle Sam cuts a large portion of his checks, while May 2009 had five. On the receipts side, both May 2009 had four high-collection first business days of the week (Mondays, except for the Tuesday after Memorial Day), while May 2010 had five.

Even with that built-in advantage, a side-by-side comparison of current month and year-to-date collections is troubling. When one goes back two years to May 2008, which also had only four high-collection days), it's even more disturbing (figures presented are from the final Daily Treasury Statements in May 2010, May 2009, and May 2008):

 

While it's nice that monthly receipts during May 2010 were about 25% higher than May 2009 ($146.7 billion vs. $117.2 billion), they were still a 14% lower than May 2008 (after subtracting 2008 stimulus payments, which should have been treated as disbursements) -- six months after when the National Bureau of Economic Research ruled that the recession as they define it began.

Year-to-date results through the first eight months of the government's fiscal year are even more disturbing. Collections from October 2009 through May 2010 are still lower than the previous year's disastrous eight months, and are 22% lower than October 2007 through May 2008. This has occurred despite the fact that the economy has been growing since the third quarter of last year, when the recession as normal people define it ended.

June and September are the two remaining critical months for receipts, as those are the months during which the second and third installments of estimated taxes are due from those who don't have their taxes withheld, i.e., many entrepreneurs, businesspeople, and investors. If those two months seriously trail 2009, the Obama administration will have overseen the seemingly impossible: a growing economy that somehow collected less money.

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