Obama's Treasury Department is blaming TARP payments and other accounting quirks to explain the jump in the US deficit. But actually, it's more.
The Treasury reported a deficit of $829 billion for the October-March period, compared with $717 billion a year earlier, as revenue rose a sluggish 6.9 percent as the economic recovery slowly gained pace.
The Treasury argued that the pace of increase in the deficit was deceptive because of large one-off reductions in expenditures made during the first half of fiscal 2010, compared with previous and subsequent periods.
Those included a $115 billion reduction in funds spent on the Troubled Asset Relief Program (TARP) -- the financial institution bailout program -- in March 2010.
But 2011 so far has also seen significant increases in spending on defense, Social Security, health and debt service, while receipts have not grown as fast.
"The jump in outlays mostly owed to a smaller estimated reduction in TARP outlays this year versus 2010," said Theresa Chen at Barclays Capital Research.
However, she said, the trend shows that taxable income is rising at a 6.9 percent annual pace, and individual incomes taxes are up 20.6 percent, "consistent with general economic improvement."
We'll see if those numbers on income and taxes play out for the rest of the year. With gasoline prices heading toward $5 a gallon and housing prices continuing their free fall, a slowdown in this sluggish economy is a definite possibility.