US budget deficit to hit 1.35 trillion dollars in 2010: CBO
The US government's budget deficit is expected to fall slightly to 1.349 trillion dollars in 2010 but accumulating deficits could double public debt to 15 trillion dollars in a decade, estimates by Congress showed Tuesday.business Updated: Jan 26, 2010 23:34 IST
The US government's budget deficit is expected to fall slightly to 1.349 trillion dollars in 2010 but accumulating deficits could double public debt to 15 trillion dollars in a decade, estimates by Congress showed Tuesday.
The deficit for the 2009 fiscal year ended September 30 was 1.414 trillion dollars, the largest since the end of World War II.
The Congressional Budget Office (CBO) warned Tuesday that if legislation were enacted in the next several months that either boosted spending or reduced revenues, the 2010 deficit could equal or exceed last year's shortfall.
It said that at 9.2 percent of gross domestic product, the estimated 2010 deficit would be "slightly smaller than the shortfall of 9.9 percent of GDP (1.4 trillion dollars) posted in 2009."
Last year's deficit was the largest as a share of GDP, the basic measure of a country's overall economic output.
The CBO cautioned that the federal fiscal outlook beyond this year was "daunting," citing projected deficits averaging about 600 billion dollars per year over the 2011-2020 period even as they were expected to fall.
The accumulating deficits could double federal debt held by the public to 15 trillion dollars or 67 percent of GDP, it said.
At the end of 2009, debt held by the public was 7.5 trillion dollars or 53 percent of GDP.
By the end of 2020, debt is projected to climb to 15 trillion dollars, it said.
"With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket," the CBO said.
The US government closed its 2009 fiscal year with a record 1.416-trillion-dollar budget deficit and the White House forecasts an even bigger gap of 1.502 trillion dollars in fiscal 2010.
The size of the deficit is one factor -- along with high unemployment and the sluggish economic recovery from the worst financial crisis in decades -- that is helping to drag down public perceptions of President Barack Obama's economic management.
Obama on Wednesday will call for a three-year partial freeze on spending that would save 250 billion dollars over a decade, in a bid to show he is serious about cutting the huge deficit, officials said.
Obama will unveil the plan to cap discretionary non-security government spending in his State of the Union address, a showpiece event shaping up as a chance to recast his presidency amid a fierce political storm.