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Federal Budget Deficit To Exceed $1.4 Trillion In 2010 And 2011

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The federal budget deficit, which hit a record $1.4 trillion last year, will exceed that figure this year and again in 2011, the White House predicted Friday, providing fresh ammunition to Republicans who are hammering President Obama for all the red ink as they campaign to regain control of Congress in November.

The latest forecast from the White House budget office shows the deficit rising to $1.47 trillion this year, forcing the government to borrow 41 cents of every dollar it spends. Contrary to official projections, the budget gap will not begin to narrow much in 2011, because of an unexpectedly big drop in tax receipts.

White House budget director Peter Orszag said in a conference call with reporters that Obama is still on track to cut the deficit in half by the end of his first term. But the forecast provides no relief from the gloomy outlook that has been forcing Obama to consider deeper cuts to defense and non-security programs as well as additional tax increases. This week, the administration also repeated its intention to let tax cuts for the wealthy expire in January.

With polls showing high public anxiety over the economy and government borrowing, Republicans wasted no time blasting the new forecast. They accused Obama and congressional Democrats of orchestrating a government expansion that threatens to push the nation toward a European-style debt crisis while failing to create jobs.

"For more than a year and a half, the president and his Democrat allies on Capitol Hill have pushed an anti-business, anti-jobs agenda on the American people while adding trillions to the debt," Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement. "It's time for a new approach, one that listens to the American people rather than forcing Washington-based mandates."

Democrats sought to remind voters that persistently large budget gaps are primarily the result of a severe recession that depressed tax revenue and forced policymakers to spend hundreds of billions of dollars on economic rescue programs, such as last year's $862 billion stimulus package.

Unemployment has nonetheless risen. The White House predicted Friday it will not dip below 8 percent until the end of 2012. Still, many economists say federal action probably saved the nation from a full-blown meltdown.


It's the deficit recovery.

Still spending more money than you earn is sustainable and there is nothing to worry about....

At some point the debt servicing costs are going to derail the US. No one can accurately predict when that point will be reached but it's going to come at some point. Japan has avoided this trap for a couple of decades now, but they had the ability to trade with the rest of the world.

The graphic is quite interesting as the US if the projected figures are accurate will slowly reduce the deficit before it starts to get bigger again.

Luckily it's all contained and growth will take care of all this lovely debt.

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  • 396 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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