The U.S. federal budget deficit increased in the first quarter of the new fiscal year, a non-partisan congressional office said this week. The budget deficit is $27 billion higher after the first three months of the 2008 budget year, which began on October 1, than it was after a comparable period for 2007, according to the Congressional Budget Office (CBO). The rise was attributed in part to a slowdown in tax revenue growth, as well as a softening economy. The government ran a $163 billion deficit in fiscal 2007, the lowest in five years. The deficit for the first three months of the current budget year is $107 billion, as opposed to $80 billion for the first three months of fiscal 2007. Revenues grew at a 5.6 percent rate, the CBO said, about 2 percentage points less than the 2007 growth rate. At the same time, spending grew at an almost 9 percent rate. Corporate income tax revenues are down 5 percent thus far for the 2008 budget year as a result of the weaker economy, the CBO said. On the spending side, defense spending grew by about 8 percent, the office said, while the spending on medical care for the poor and disabled rose to an almost 11 percent rate. “CBO's review is yet another indication for why we cannot take economic growth for granted, and we must remain steadfast and dedicated to keeping taxes low and restraining government spending,” said Jim Nussle, director of the White House budget office. Neither the CBO nor the White House budget office have updated official estimates for 2008 from reports issued last summer. The White House is scheduled to release its 2009 budget on February 4.
