U.S. budget deficit hits $1.3 trillion
Washington ? The Obama administration said Friday the federal deficit hit a near-record $1.3 trillion for the just-completed budget year.
That means the government had to borrow 37 cents out of every dollar it spent as tax revenues continued to lag while spending on food stamps and unemployment benefits went up as joblessness neared double-digit levels in a struggling economy.
While expected, the eye-popping deficit numbers provide Republican critics of President Barack Obama’s fiscal stewardship with fresh ammunition less than three weeks ahead of the midterm congressional elections. The deficit was $122 billion less than last year, a modest improvement.
Voter anger over deficits and spending are a big problem for Democrats this election year. Republicans are slamming Democrats — who face big losses in November — for votes on Obama’s $814 billion economic stimulus last year and on former President George W. Bush’s $700 billion bailout of Wall Street.
Democrats say the recession would have been worse if the government hadn’t stepped in with those programs to prop up the economy. They also note that most of the bailout, which began during the previous administration and was supported by many Republicans in Congress, has been repaid.
Outside of the bailout, the federal budget went up by 9 percent in the 2010 budget year to $3.5 trillion, the Congressional Budget Office reported last week. Food stamp payments rose 27 percent as record numbers of people took advantage of the programs, while unemployment benefits rose 34 percent as Congress extended benefits for the long-term jobless.
“The FY 2010 deficit remained elevated as a result of the severe economic recession, high unemployment, and the financial crisis inherited by the current administration,” Treasury Secretary Timothy Geithner and acting White House budget director Jeffrey Zients said in a statement announcing the results.
Rising deficits will present headaches for policymakers regardless of which party controls Congress after November.
The administration is projecting that the deficit for the 2011 budget year, which began on Oct. 1, will climb to $1.4 trillion. Over the next decade, it will total $8.47 trillion. Deficits of that size will constrain the administration’s agenda over the next two years and will certainly be an issue in the 2012 presidential race.
Government revenues rose by $57.4 billion in 2010 compared to 2009, but more than two-thirds of that increase reflected higher payments from the Federal Reserve to the Treasury on all the investments the central bank has made to support the economy and the financial system during the recession.
Income tax revenue fell slightly as unemployment stays near 10 percent nationwide, though corporate tax receipts were up almost 40 percent as the economy slowly pulls out of the worst recession since the Great Depression.
Obama’s bipartisan deficit commission is supposed to report a deficit-cutting plan on Dec. 1, but panel members are unsure at best whether they’ll be able to agree on anything approaching Obama’s goal of cutting the deficit to about 3 percent of the size of gross domestic product (GDP).







