US Government runs $1.3 trillion budget deficit in 2011 By MARTIN CRUTSINGER
- AP Economics Writer
| Fri, Oct 14, 2011
WASHINGTON (AP) — The U.S. government ran a $1.3
trillion deficit for the budget year that ended last month,
the third straight year it has operated more than $1 trillion
in the red.
The 2011 budget deficit was the second highest on record.
It's slightly ahead of the previous budget year's $1.29
trillion deficit but below the $1.41 trillion imbalance
record in 2009.
A decade ago, the government was running surpluses and
trillion-dollar deficits seemed unimaginable. But those
deficits now loom over tense negotiations in Washington.
Lawmakers are under pressure to agree by Thanksgiving on
where they can cut $1.2 trillion over the next decade. If
they cannot, automatic cuts to Medicare, defense spending
and other critical areas of the budget would go into effect
in Jan. 2013.
For 2011, the government had to borrow 36 cents of every
dollar it spent. The string of massive debts has made interest
on that debt the fastest growing budget category. For 2011,
net interest payments rose 15.7 percent to $227 billion.
A slightly improved job market helped boost income tax
revenue this year. From October 2010 through last month,
the economy added 1.3 million net jobs. That compares with
only 339,000 net job gains in the previous 12-month period.
Still, that hasn't been enough to bring the millions of
Americans who lost jobs during the recession back into the
work force.
The government also lost revenue because of the 2 percentage
point cut in Social Security taxes, and also it had to pay
for an extension of emergency unemployment benefits. Congress
approved both in December to boost the sluggish economy.
Total revenues increased 6.5 percent to $2.3 trillion for
the budget year that ended Sept. 30; spending rose 4.2 percent
to $3.6 trillion.
The nation's debt is now $14.8 trillion. The enormity of
that figure has stoked intense partisan debate in Congress
over spending and taxes. Polls show growing voter anger
with the inability of both parties to reach solutions to
the country's budget problems.
Congress reached a last-minute deal in August to raise
the government's borrowing limit in stages. But as part
of the deal, lawmakers tasked a 12-member deficit-cutting
panel with finding at least $1.2 trillion in savings over
the next decade.
The committee, which is evenly split between Democrats
and Republicans, has until Thanksgiving to come up with
a plan. It would then go before the House and Senate in
December for up-or-down votes.
Administration officials said Friday that Congress needs
to reach an agreement through the supercommittee process
but also should approve President Barack Obama's $447 billion
jobs plan. But the measure fell short of gaining the 60
votes required to be called up for debate in the Senate.
All 46 Republicans in the chamber opposed the measure, which
seeks to pay for the plan by boosting taxes on the wealthy
and corporations
As members of the supercommittee deliberate in secret,
party leaders have jousted in public over their conflicting
priorities. For Republicans, that means no tax increases.
For Democrats, it means no curbs on popular entitlement
programs, such as Medicare, without tax increases.
The August budget deal is projected to trim future deficits
by $2.1 trillion. That includes the cuts made by the supercommittee
and another $900 billion in savings from caps on discretionary
spending.
The cuts are expected to begin in the 2012 budget year.
CBO estimates $21 billion in cuts to this year's deficit,
which is estimated to be $973 billion. The Obama administration
is estimating that the 2012 deficit will total $956 billion.