CBO estimates $390 billion budget deficit for first quarter of FY 2010

The Congressional Budget Office late Thursday released a report estimating that the federal budget deficit was $390 billion for the first quarter of fiscal year 2010.

During the same quarter in 2009, the federal deficit was $56 billion less due to an 11 percent reduction in federal revenues over that time period while the nonpartisan office reported that spending fell by 4 percent. 

"This is the second consecutive December that the federal government will record a budget deficit," CBO officials in its Monthly Budget Review. "Typically, that month yields a budget surplus because most corporations make quarterly income tax payments and withholding for individuals is relatively high owing to year-end bonuses and seasonal employment."

CBO's report could provide even more fodder for critics of the White House who say that the administration needs to do more to reign in the growing deficit. Obama administration officials and Democratic leaders in Congress have indicated over the past few months that they will make deficit reduction a priority in 2010.

The new focus comes after Obama and Democrats in Congress have pushed the annual deficit to $1.4 trillion by spending billions on new federal programs. Democratic leaders have claimed that many of the big-ticket initiatives, such as the $787 billion stimulus, were designed to keep the economy afloat after the 2008 financial collapse and ensuing recession.

The report also was released just before House and Senate Democrats put the final touches on the upper chamber's $848 billion healthcare reform bill. The CBO has reported that the legislation will reduce the federal deficit over the next decade but Republicans say that it will make the deficit rise even more.

The CBO credits the $18 billion decline in December federal revenue was due in part to tax credits and cuts included in the stimulus bill. At the same time, spending under the $700 billion Troubled Asset Relief Program (TARP) passed under the Bush administration fell by $85 billion dollars from the first quarter of 2009.

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