The deficit amounts to nearly three times the $36.4 billion where it stood a year ago, and far exceeds the $97 billion in red ink that had been forecasted by Wall Street economists for the month. So far for the year, the budget deficit totals $371.4 billion, more than double last year's deficit through the same time period of $157.4 billion.
The Bush administration recently revised its forecast for this year's deficit, lowering it from an estimate of $410 billion, down to $389 billion. In contrast, the Congressional Budget Office is posting a more pessimistic estimate, forecasting the deficit for this year will total $400 billion at the close of the current budget year, September 30.
For the 2009 budget year, which begins October 1, the administration is now projecting a deficit of $482 billion, which would be the highest in dollar terms in history, surpassing the old mark of $413 billion set in 2004.
The FDIC is expected to eventually recover the majority of the funds paid out to cover failed bank deposits, in part by selling the assets of seized institutions such as California-based IndyMac Bank, the largest regulated thrift to fail in U.S. history. In order to cover the costs of increasingly frequent bank failures, which the FDIC expects to occur as the credit crunch continues to wreak havoc, the FDIC says it may need to increase insurance premiums on healthy banks.
The July deficit also looked worse than the July 2007 deficit because last year's figure was artificially deflated by timing issues that shifted about $19 billion in normal outlays into the prior month.
Through July, government revenues total $2.094 trillion, down 1 percent from the same period a year ago. Revenues have been weaker this year, reflecting the sharp slowdown in the overall economy.
Government spending so far this budget year totals $2.466 trillion, 8.5 percent higher than a year ago. The spiraling figures are in part due to the $168 billion stimulus package, aimed at keeping the country out of recession, and increased spending to fund the wars in Iraq and Afghanistan.