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News Link • Government Debt & Financing

Federal Deficit Hits Near-Record $1.3 Trillion In 2010

The Obama administration says 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 the economy slowly pulled out of recession. The eye-popping deficit figures 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. Republicans have tapped into voter angst over the deficits, using the $814 billion economic stimulus and $700 billion Wall Street bailout to paint Obama and his party as big spenders. Democrats say the recession would have been worse if the government didn't step in with those programs to prop up the economy. They also note that most of the bailout, which began during the Bush administration and was supported by many Republicans in Congress, has been repaid. Both parties have acknowledged that rising deficits will present headaches for policymakers regardless of which party controls Congress after November. Obama has appointed a bipartisan commission to study the deficit and recommend policy changes. Those recommendations are expected in December, after the elections, and the panel needs the backing of 14 of its 18 members to trigger a congressional vote.

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