Ahead of the Bell: US budget deficit

WASHINGTON (AP) ? The U.S. federal budget deficit likely neared the $1 trillion mark in July ? and may have even passed it.

The Congressional Budget Office projects that the government added $71 billion to the deficit in July. That would bring the deficit through the first 10 months of the budget year to $975 billion.

The Treasury Department will release the actual figure at 2 p.m. Eastern Friday.

President Barack Obama will almost certainly face voters in November having run trillion-dollar-plus deficits in each his first four years in office.

The budget year ends on Sept. 30 and CBO projects the deficit will total $1.17 trillion. That would only be a slight improvement from the $1.3 trillion deficit recorded in fiscal 2011 and not low enough to cool the budget debate in Washington or on the campaign trail.

Obama and Republicans remain at odds over how much to spend, where to cut and whether tax increases should be on the table. GOP candidate Mitt Romney has also promised to cut spending in order to reduce the budget gap.

Obama submitted a budget to Congress in February that called for $4 trillion in deficit reduction over the next decade through a combination of spending cuts and tax hikes on the wealthy. Obama's plan would let Bush-era tax cuts expire for couples making more than $250,000. Obama would also set a 30 percent tax rate on taxpayers making more than $1 million.

Republicans have rejected the tax increases and want deeper cuts in government programs. The GOP-controlled House has approved a budget that calls for deep cuts in Medicare and other programs and a new round of tax cuts that would favor wealthy Americans.

The House-approved spending plan has no chance of passing in the Senate, where Democrats hold a slim majority. That sets the stage for gridlock until after the November elections when lawmakers will be faced with a number of end-of-the-year deadlines.

That gridlock could push the economy over the "fiscal cliff" at year's end. That's when tax increases and deep spending cuts will take effect unless Congress reaches a budget agreement.

Both parties oppose the automatic spending reductions because they include deep cuts in defense. If the tax increases and spending cuts take effect, many economists say a recession could follow.

Source: http://news.yahoo.com/ahead-bell-us-budget-deficit-112118633.html

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