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US Federal budget deficit drops 22%

11 August 2011 10:01 (UTC +04:00)

Baku â€“ APA-Economics. The U.S. budget deficit for this fiscal year topped the $1 trillion mark in July, yet was running lower than the shortfall in the same period last year, the Treasury Department said Wednesday, Wall Street Journal reported.

The U.S. spent $129.38 billion more than it collected last month, raising the shortfall for the first 10 months of fiscal 2011 to $1.1 trillion.

That amount is lower than the deficit in the first 10 months of fiscal 2010, which was $1.169 trillion.

Spending so far in this fiscal year is running above the level in the same period a year ago but so is revenue.

The Obama administration has forecast a deficit of $1.65 trillion for fiscal 2011, which ends Sept. 30. Depending on spending and revenue in August and September, the actual shortfall is likely to finish below that projection.

The nation’s budget has been a hot issue among politicians this year. Last week, a 12-member budget-cutting panel was created as part of the compromise agreement to raise the country’s $14.29 trillion debt ceiling. That deal included a down payment of $917 billion in deficit-reduction measures and then mandated the committee of lawmakers to scour the budget to find more cuts.

The federal government borrows about 40 cents out of every dollar it spends. The Congressional Budget Office projects the federal budget deficit will rise to $1.4 trillion in the fiscal year. Primary government securities dealers are forecasting a deficit of $1.36 trillion in fiscal 2011 and $1.13 trillion in fiscal 2012.

Trimming the budget, however, could lead to job cuts. The unemployment rate in July was a high 9.1%. Joblessness in the U.S. is contributing to the nation’s economic malaise. The Federal Reserve this week said it would keep interest rates very low into 2013, a signal it expects growth won’t be strong for a while.