Finance

Finance

US budget deficit falls

18 February 2010 10:26 (UTC +04:00)

Baku. Nijat Mustafayev â€“ APA-Economics. The US government chalked up a smaller-than-expected budget deficit in January, the Treasury said Wednesday, though the gap is projected to hit a record 1.56 trillion dollars in 2010, AFP reports.

The deficit of 42.634 billion dollars was less than the 46.0 billion dollars expected by most economists and compared with a deficit of 91.41 billion dollars in December, according to the Treasury’s monthly report.

The January shortfall stemmed from government spending of 247.87 billion dollars and revenue of 205.24 billion dollars, the report said.

For the first four months of the 2010 fiscal year that began October 1, 2009, the deficit widened to 430.7 billion dollars, an 8.8 percent jump from the same period the previous year, the Treasury said.

The deficit for the 2009 fiscal year that ended September 30 was 1.415 trillion dollars and the White House projected earlier this month that the gap would widen to a record 1.556 trillion dollars in 2010.

Measured against the size of the economy, the budget shortfall in 2010 would equal a hefty and unsustainable 10.6 percent of gross domestic product, the broad measure of a country’s economic output.

Officials say a sustainable deficit-GDP ratio is about three percent.

Concerned about the ballooning deficit, President Barack Obama will sign Thursday an executive order establishing a bipartisan commission to find ways to reduce the gap, the White House said.

Obama has chosen Democrat Erskine Bowles, the White House chief of staff for ex-president Bill Clinton, and former Republican senator Alan Simpson of Wyoming to head the panel, the official said.

The president repeatedly has complained that plans for a congressionally mandated fiscal commission were killed in the Senate -- by Republicans who had previously backed the idea as a way of trimming huge US deficits.

The congressionally appointed commission would have had more teeth and the power to force lawmakers to vote on its recommendations.