2011 Budget Deficit to Hit New Record
Headlines Wednesday, January 26th, 2011
WASHINGTON – A continuing weak economy and last month’s bipartisan tax cut legislation will drive the government’s deficit to a record $1.5 trillion this year, a new government estimate predicts.
The eye-popping numbers mean the government will continue to borrow 40 cents for every dollar it spends.
The new Congressional Budget Office estimates will add fuel to a raging debate over cutting spending and looming legislation that’s required to allow the government to borrow more money as the national debt nears the $14.3 trillion cap set by law. Republicans controlling the House say there’s no way they’ll raise the limit without significant cuts in spending, starting with a government funding bill that will advance next month.
The CBO analysis predicts the economy will grow by 3.1 percent this year, but that joblessness will remain above 9 percent this year. Dauntingly for President Obama, the nonpartisan agency estimates a nationwide unemployment rate of 8.2 percent on Election Day in 2012.
The latest figures are up from previous estimates because of bipartisan legislation passed in December that extended Bush-era tax cuts, unemployment benefits for the long-term jobless and provided a 2 percent payroll tax cut this year.
That measure added almost $400 billion to this year’s deficit, CBO says.
by Andrew Taylor
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