The Treasury Department announced Wednesday that the budget gap rose to $172 billion in November, up from $120 billion in October.
Get that? That’s an increase of more than $52 billion in just one month!
“The November deficit was also 25 percent higher than the same month last year. Last month’s deficit was pushed higher by a calendar quirk that pulled about $33 billion in benefits payments into November from December,” the Associated Press notes.
“The government finished the 2012 budget year with a deficit of $1.1 trillion,” the report adds.
Tax revenue rose 10 percent in the first two months of FY2013 to $346 billion. Meanwhile, government spending was up $87 billion (16 percent), according to the Treasury Department.
In short, we’re only two months into the 2013 fiscal year and the country is well on its way to its fifth straight $1 trillion-plus deficit.
(For context, it’s important to note that the last time the U.S. ran an annual surplus was in 2001.)
But what does this all mean? What are the overall implications of the Treasury Department’s announcement?
First of all, let me remind you that the Federal Reserve announced today that it will continue its bond purchasing programs until it is satisfied the economy has improved — meaning there is no foreseeable end to quantitative easing (“QE”).
“[A]as long as the Treasury runs $1+ trillion budget deficit, the Fed will never, ever be allowed to stop monetizing, especially with China and the other legacy foreign borrowers just saying nein,” Zero Hedge notes. “Which in turn means that it will now be in the Fed’s favor to paint the economy with uglier colors.”
Exit Question (from Zero Hedge): “Does this mean that going over the Cliff is now an absolute certainty?”
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