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article imageFederal budget deficit tops $1 trillion

By Matthew Moran     Jul 13, 2009 in Politics
With three months remaining in the fiscal year, the federal budget deficit has passed $1 trillion, sparking a new round of fears about high interest rates and inflation.
The United States broke a historic record for the month of June, spending $94 billion than it earned in tax revenues. That feat brought the federal deficit to $1.1 trillion for the fiscal year that began in October of 2008.
Two wars, an economic meltdown and a broad domestic agenda coupled with falling tax revenues has pushed the U.S. further into debt than ever before.
According to the Associated Press, foreign investors who hold a great deal of U.S. treasury debt are becoming increasingly nervous over American fiscal policy.
"These are mind boggling numbers," Sung Won Sohn, an economist at the Smith School of Business at California State University, told the AP. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."
Congress has spent enormous amounts on domestic programs and economic stimulus, aimed at turning around the U.S. and world economy.
According to the Congressional Budget Office, the deficit at this point this year is $800 billion more than this time last year.
The report, which can be read here, also says that the deficit only factors in $147 billion in TARP spending. TARP stands for Troubled Asset Relief Program, and was enacted by Congress to help the housing industry. The program is expected to cost around $700 billion
Tax revenues are down drastically this year. Income tax receipts are down 17 percent. Experts say considering the downturn, this is to be expected.
“When you have soaring costs in battling the economic crisis and bailing out corporations amid escalating unemployment and a rapidly eroding tax base, you get ballooning deficits,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York, said before today’s report, as quoted at Bloomberg.com.
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