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U.S. Federal Budget Deficit Swells Amid Fiscal Uncertainties |
| Source: |
English.news.cn |
| Source Date: |
Saturday, August 11, 2012 |
| Focus: |
Knowledge Management in Government
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| Country: |
United States |
| Created: |
Aug 14, 2012 |
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WASHINGTON, Aug. 10 (Xinhua) -- The U.S. federal government registered a budget deficit of about 69.6 billion U.S. dollars in July, bringing the total budget gap for the first 10 months of this fiscal year near the 1-trillion-dollar mark.
The aggregate deficit through July totaled 973.8 billion dollars, the U.S. Treasury Department reported on Friday.
The level was 11.5 percent lower than the imbalance for the same period of last fiscal year, but still put the country on track for a deficit of over 1 trillion dollars for the fourth consecutive fiscal year.
The Congressional Budget Office (CBO), a non-partisan budgetary and economic research agency for the U.S. Congress, predicted that the federal government would run a budget deficit of about 1.17 trillion dollars in the current fiscal year, a slight reduction from the 1.3-trillion-dollar budget deficit recorded in the 2011 fiscal year.
Facing growing pressures from fiscal challenges brought about by tax hikes and automatic spending cuts scheduled to kick in early next year, Democrats and Republicans at the Congress are still at odds over how to bring the fiscal policy back to a sustainable path.
U.S. President Barack Obama and Democrats called for a combination of spending cuts and tax hikes for the wealthy. They plan to let Bush-era tax credits expire for families making more than 250,000 dollars a year. Republicans rejected the tax increases on top earners and wanted deeper cuts in social programs.
The GOP-controlled House of Representatives and Democrat-led Senate have passed their proposals respectively before a five- week recess. They are poised for a showdown on the deficit and taxes at the year end.
GROWING CONCERNS
Fears are growing that the political gridlock on fiscal policy would weigh on economy and massive fiscal tightening measures would throw the country into recession.
Mark Zandi, a chief economist of Moody's Analytics, said the threat posed by the fiscal problems is "intensifying" at a time when the U.S. economy continues to "muddle along."
He said the Treasury debt ceiling would need to be raised again in February 2013, and the issue will be compounded by the "fiscal cliff" early next year when broad tax increases and deep spending cuts will take effect unless the Congress reaches an agreement.
"Scaling back the fiscal cliff is necessary to avoid recession, " he said. "The most important and contentious decisions are what to do about the expiring Bush-era cuts and the automatic spending cuts in the defense and nondefense discretionary budgets required under the sequestration agreement to raise the debt ceiling last summer."
Zandi predicted none of the issues will be addressed before the presidential election and even after it. "There will be plenty of political brinkmanship and the economy is sure to suffer, especially early next year," he noted.
Erskine Bowles, who served as chief of staff for former U.S. President Bill Clinton, wrote an article in the Washington Post, saying that real deficit reduction - cutting the deficit by at least 4 trillion dollars over the next decade to stabilize the debt and get it on a downward path as a percentage of gross domestic product - won't happen without sweeping tax reform.
"Over the next four years, the United States will need to do much more to address its long-term debt than either party has been willing to do. This fall, the American people deserve a serious national debate about our debt, not easy promises," he noted.
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U.S. Federal Budget Deficit Swells Amid Fiscal Uncertainties The U.S federal government registered a budget deficit of about 69.6 billion U.S dollars in July bringing the total budget gap for the first 10 months of this fiscal year near the 1-trillion-dollar mark
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