Federal deficit runs just below ’09 record
WASHINGTON — With two months to go in the budget year, the federal deficit is running slightly below the all-time record set a year ago.
The Treasury Department said yesterday the deficit for July totaled $165 billion, pushing the imbalance for the year ended Sept. 30 to $1.17 trillion. That is down 7.7 percent from the same time last year, reflecting higher corporate taxes on increased earnings and lower spending on emergency programs to combat the recession and stabilize the financial system.
The Obama administration continues to predict that this year’s deficit will surpass 2009’s record imbalance of $1.42 trillion. In a forecast released in late July, the administration projected that the deficit will climb to $1.47 trillion in 2010 and fall only slightly to $911 billion in 2012.
Many private forecasters, though, believe the deficit for this year will come in lower, at around $1.3 trillion. Still, deficits in the $1 trillion range far exceed what the country has previously experienced and have alarmed economists and voters.
The Obama administration contends that the government had no choice but to run huge deficits over the past two years in an effort to deal with the most serious economic crisis since the Great Depression of the 1930s. But Republicans say that the billions spent on economic stimulus and stabilizing the banking system have had little impact on cutting the unemployment rate. They hope to make the huge deficits an issue in the upcoming election.
President Obama has appointed a deficit commission that is scheduled to report in December, after the November congressional elections, with recommendations on how the deficits can be brought under control.
Republican opposition has forced the administration to scale back its efforts to pass more jobs programs.