Record deficit

Tax tak­ings also fall­ing

Finweek English Edition - - Property Compass - GRETA STEYN

THE BAIL OUT OF BANKS in the United States has started to af­fect the coun­try’s al­ready big bud­get deficit at a time when tax in­come is dis­ap­point­ing. The US gov­ern­ment recorded a monthly bud­get deficit of US$237,2bn in Oc­to­ber – its largest monthly deficit ever recorded.

The high Oc­to­ber deficit was mainly due to the $115bn dis­bursed un­der the Trou­bled As­set Re­lief Pro­gramme (Tarp). Stan­lib econ­o­mist Kevin Lings says it’s un­for­tu­nate that, dur­ing the month, US tax rev­enue con­tin­ued to slump and is clearly trend­ing lower.

Lings says other ar­eas of US ex­pen­di­ture out­side of the Tarp pro­gramme also in­creased no­tice­ably dur­ing the month. For ex­am­ple, so­cial se­cu­rity spending was up 13% com­pared with last year, while de­fence spending rose 16% year-on-year.

Lings says the deficit will rise dra­mat­i­cally in the months ahead as cur­rent trends con­tinue, fur­ther in­ten­si­fied by a stim­u­lus pack­age. Lings says the an­nual deficit could eas­ily reach $1 tril­lion, or a record 7% of gross do­mes­tic prod­uct. “That would be… well in ex­cess of ac­cepted in­ter­na­tional guide­lines of 3% of GDP,” Lings says.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.