When the government can't post a surplus in tax month, you know something is seriously wrong.
(Bloomberg) -- The U.S. reported the first budget deficit for April in 26 years, recording a shortfall in the month that usually sees a jump in individual tax payments before the Internal Revenue Service’s mid-month deadline.
“When the government can’t post a surplus in April, you know things are dire,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York. “It’s going to take a very long time until we see anything close to a balanced budget.”
The excess of spending over revenue climbed to $20.9 billion, compared with a surplus of $159.3 billion in the same month a year earlier, the Treasury said today in Washington. For the fiscal year to date, the shortfall totaled $802.3 billion, more than four times the year-to-date gap of $153.5 billion in April 2008.
Corporate tax receipts totaled $70.8 billion for the year to date versus $171.1 billion, a decrease of 58.6 percent, Treasury said. Individual income tax collections were down 24.2 percent so far this fiscal year to $566.4 billion compared with $747.6 billion in the year-earlier period.
The Treasury also said that for the fiscal year to date it has spent $184 billion on the financial rescue plan called the Troubled Asset Relief Program, and $130.7 billion to purchase mortgage debt from government-sponsored enterprises including Fannie Mae and Freddie Mac, now in government conservatorship.
The most amazing numbers from this are the dramatic fall in tax receipts. How can stocks be up when profits, as evidenced by tax revenue, have collapsed.
The collapse in individual tax revenue is equally disturbing. It shows not just a collapse in employment, but a collapse in hours worked.