CBO Projects $1.3 Deficit for 2010 But Already Deficit Is Running 16.8% Higher Than Last Year

Barack Obama tripled the national deficit his first year in office.

The CBO announced today that thanks to the record spending by democrats last year this year’s budget deficit would once again top one trillion dollars.
From the CBO Director’s blog:

CBO projects, that if current laws and policies remained unchanged, the federal budget would show a deficit of $1.3 trillion for fiscal year 2010. At 9.2 percent of gross domestic product (GDP), that deficit would be slightly smaller than the shortfall of 9.9 percent of GDP ($1.4 trillion) posted in 2009. Last year’s deficit was the largest as a share of GDP since the end of World War II, and the deficit expected for 2010 would be the second largest. Moreover, if legislation is enacted in the next several months that either boosts spending or reduces revenues, the 2010 deficit could equal or exceed last year’s shortfall.

The large 2009 and 2010 deficits reflect a combination of factors that are discussed in CBO’s Budget and Economic Outlook: Fiscal years 2010-2020. Those factors include: an imbalance between revenues and spending that predates the recession and turmoil in financial markets, sharply lower revenues and elevated spending associated with those economic conditions, and the costs of various federal policies implemented in response to those conditions.

The deep recession that began two years ago appears to have ended in mid-2009. Economic activity picked up during the second half of last year, with inflation-adjusted GDP and industrial production both showing gains. Still, GDP remains roughly 6½ percent below CBO’s estimate of the output that could be produced if all labor and capital were fully employed (that difference is called the output gap), and the unemployment rate—at 10 percent—is twice what it was two years ago.

Economic growth in the next few years will probably be muted in the aftermath of the financial and economic turmoil. Experience in the United States and in other countries suggests that recovery from recessions triggered by financial crises and large declines in asset prices tends to be protracted.

These projections by the CBO are all fine and dandy but it should be noted that the national deficit is already running 16.8% higher than last year’s $1.4 trillion annual deficit.
China View reported earlier this month:

The U.S. federal budget deficit totaled 91.85 billion U.S. dollars in December. The deficit was slightly less than the 92 billion dollars that analysts had expected. But the red ink of the first three months of fiscal year 2010 beginning from October 2009 is 16.8 percent higher than the same period of the fiscal year 2009 when it hit a record 1.42 trillion dollars.

With democrats in charge it’s more likely than not that the national deficit in 2010 will top last year’s 1.4 trillion dollar record.

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