According to the Congressional Budget Office, the U.S. government lost $953 billion in the first half of its fiscal year, which ended in March. If trouble with the economy deepens, that number may get much bigger than the Administration or CBO forecast.
The current budget does not take into account a prolonged period with unemployment above 9 percent -- and this may well be where the economy is heading. A huge shortfall in IRS receipts from either business or individual taxpayers could ruin plans for government spending to increase the number of jobs in the U.S.IRS income is already dropping. Reuters reports that "receipts during the six-month period dropped about $160 billion, or 14 percent, over the same period in fiscal 2008. Nearly half of the drop, $73 billion, came from a fall in corporate income tax receipts." Salary freezes and layoffs should drive that income number lower in the second half.
The figures show that the budget and stimulus package may already be too little and too late to create a floor under the falling economy. If the hole in the first half was $1 trillion, how much worse does it get as the year goes on and how quickly does the need for government borrowing blow through Administration estimates? Probably pretty fast.
Douglas A. McIntyre is an editor at 24/7 Wall St.