Federal budget deficit in 2010 may be higher than 2009
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Print The federal budget deficit for 2010 is estimated at around $1.38 trillion. This is close to the 2009 level, however, many expect that planned additional spending by Congress will result in the federal budget deficit being even higher.
2010 federal budget deficit largest ever?
According to the Congressional Budget Office (CBO) , the federal government intends to spend $3.64 trillion, but raise only $2.26 trillion in 2010. If the federal budget deficit increases by another $200 billion this year, it will be the largest ever.
Although the 2010 budget could set a record for the largest budget deficit, the U.S. has had larger deficits before, as a percentage of GDP. The 2009 federal budget deficit was 11.2% of GDP, according to the CBO. The 2010 figure is currently estimated at around 9.6% of GDP.
However, at the end of World War II the budget deficit was 21.5% of GDP.
Economists, GDP and the federal budget deficit
Economists generally agree that annual budget deficits should not exceed 3% of GDP. In fact, President Barack Obama has vowed to reach that level by the end of his first term in 2013. The CBO's current forecast has the deficit at 3.2% for that year.
Those who are financing the government debt, including China and other countries, are waiting for signs that the government will take more control over the deficits. And polls show that Americans are worried as well.
In the last 40 years, the government has run a budget deficit in all but 3 years. The reason for this, according to the Tax Foundation is "simple." They contend that "In their desire to be re-elected, congressmen are afraid not to spend more and more, and they're equally afraid to give voters the bill for those services, even though that bill must inevitably be paid."
