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Deficit update

According to the Congressional Budget Office, the first quarter of fiscal year 2010 -- which means, somewhat confusingly, the period from October 2009 to December 2009 -- saw a record $390 billion budget deficit. That's $56 billion more than the same period in fiscal 2009, despite the fact that in 2009, the government was spending all sorts of money bailing out the financial sector. So what's going on?

The answer, of course, is the recession that followed the financial crisis. People need more help, and lower incomes mean less money coming in through taxes. On the spending side, unemployment insurance is up $22 billion, Medicaid is up $14 billion, Social Security is up $16 billion, and so. Tax revenues, meanwhile, dropped by $59 billion. But don't fret too much. Wall Street is still on track for record profits!

By Ezra Klein  |  January 11, 2010; 10:30 AM ET
Categories:  Budget  
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Comments

Let's not get hasty and think the banksters, bailed out by the taxpayers, should be taxed at Reagan-esque levels. Heavens no! This just means we have to cut entitlements! And more money to the DOD!

Posted by: AZProgressive | January 11, 2010 10:57 AM | Report abuse

So does also mean that the Recovery Act price tag is actually bigger than the $787 billion number we're used to hearing? Even if it's bigger I'm glad that the administration and the Congressional leadership is looking to do more, but it'd be good to know what the current estimate on the size of the stimulus is.

Posted by: reader44 | January 11, 2010 2:53 PM | Report abuse

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