WASHINGTON (AP) — The federal budget deficit is on pace to break the $1 trillion mark for a third straight year, putting pressure on Congress and the Obama administration to come up with a plan to rein in government spending.
The deficit through the first eight months of this budget year totaled $927.4 billion, the Treasury Department said Friday. Three years ago that would have ranked as the highest ever for a full year. Instead, it is running almost even with last year's pace, when the deficit grew to $1.29 trillion, and behind the 2009 deficit that hit a record $1.41 trillion.
The imbalance for May was $57.6 billion, compared to $135.9 billion for the same month last year. But much of that improvement came from a $45 billion write down in the estimated cost of the financial bailout program.
Soaring deficits have prompted Republicans to insist on deep spending cuts before agreeing to raise the $14.3 trillion borrowing limit, which the government hit in May.
A new Washington Post-ABC News poll showed that a large majority of Americans believe the country could suffer serious harm if Congress fails to broaden the government's borrowing authority. But barely half of those polled said they support such an increase.
The White House and Democrats want to trim the deficit through spending cuts and also by ending tax cuts for the wealthy, which were first passed when President George W. Bush was in office and later extended by Obama.
Republicans reject that approach, saying it amounts to a tax increase. Their plan would focus exclusively on cutting spending. They have also proposed further tax cuts for the wealthiest Americans.
The government had a surplus of $127 billion in 2001, the year President George W. Bush took office. It was projected to run surpluses totaling $5.6 trillion over the next decade.
But by 2002, the country was back in the red. The deficits grew after Bush won approval for broad tax cuts, pushed a major drug benefit program for seniors — which wasn't offset with revenue to pay for it — and the invasions of Iraq and Afghanistan were launched.
In 2008, Bush's last full year in office, the deficit had grown to $454.8 billion, a record at the time. And when the economy soured, it jumped into the $1 trillion-plus range.
The Bush administration pushed a $700 billion bailout program in 2008 to rescue the nation's banks, financial firms and automakers. The following year, the Obama administration continued the bailouts and also backed a $787 billion stimulus program to boost the economy.
Higher spending for unemployment insurance and food stamps, and the sharp contraction in tax revenues, also widened the deficit. And it grew even more this year after Obama and congressional Republicans signed off on a deal that extended the Bush tax cuts for two years and also reduced Social Security payroll taxes for one year.