Budget deficit could reach $1 trillion
WASHINGTON - The federal budget deficit is on pace to break the $1 trillion mark for the third straight year, ratcheting up the pressure on the White House and Congress to reach a deal to rein in spending.
The deficit was $971 billion for the first nine months of the budget year, the Treasury Department said yesterday. Three years ago, that would have been a record high for the full year.
With three months to go, this year’s deficit will probably top last year’s $1.29 trillion gap, according to the Congressional Budget Office. But the deficit is expected to come in below the record $1.41 trillion reached in the 2009 budget year. The budget year ends Sept. 30.
For June, the deficit was $43 billion, below the $68 billion imbalance recorded in June 2010. Much of the improvement from last year was due to a one-time drop in the estimated cost of education loans.
But the government is also receiving more tax revenue this year, which reduces the deficit a bit. Revenue rose 9 percent, or $137 billion, through June, the Treasury’s report said.
The economy has added 1 million jobs in the past nine months, though there are still nearly 7 million fewer jobs than before the recession.
Government spending has also risen this year. Interest on the national debt rose 9 percent to $386 billion in the first nine months of this year, compared with the same period last year, one of the largest increases in spending. Spending on Medicare, Medicaid, and Social Security benefits also increased.
Soaring deficits have held up a vote to raise the nation’s $14.3 trillion borrowing limit. Republicans and President Obama are at odds over a long-term plan to trim spending. Republicans want steep spending cuts in return for voting to raise the borrowing limit. Obama and Democrats in Congress want tax increases to be part of the deal, which Republicans oppose.
The government reached its borrowing limit in May. Treasury Secretary Timothy Geithner has warned that if the limit is not raised by Aug. 2, the country might not have enough money to meet its obligations for the first time ever.