Govt Report Predicts Near Record $1.3 Trillion Federal Deficit

October 08 00:00 2011

New York, October 8 ( – A Congressional Budget Office analysis released yesterday indicates a near-record $1.3 trillion deficit in the federal budget in the just completed fiscal year. The deficit figure is just a slight improvement over a record set two years ago. It is in line with previous estimates but highlights the precarious nature of the government’s fiscal position. A congressional super-committee is making efforts to produce at least $1.2 trillion in deficit savings over the coming decade.

The US economy is struggling under high oil prices, the debt crisis and economic slowdown in Europe, and continuing weakness in the housing sector. Corporate income tax receipts have dropped by 6 percent and interest payments on the $14.9 trillion national debt have gone up by 17 percent to $266 billion, notwithstanding the historically low rates.

The record deficit of $1.4 trillion took place in 2009 when the country faced a recession and a Wall Street bailout. Tax revenues have been dwindling because of the weakening economy. Economists believe that the exact impact of the deficit can only be gauged if it is compared to the size of the economy. The deficit in 2011 can be equated to about 8.6 percent of the GDP which is a slight drop from 8.9 percent registered last year.