Federal Deficit Hits $1 Trillion

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The federal deficit has reached a whopping $1 trillion for the first time ever and could grow to nearly $2 trillion by this Fall.
    
A huge amount of government spending, declining tax revenues, and the continuing costs of the wars in Iraq and Afghanistan have been factors in the deepening deficit.
    
Obama administration officials have also hinted that a second round of stimulus may be necessary to steady the economy.

CBN News interviewed Phil Kerpen, policy director for Americans for Prosperity, for his analysis on the impact of the deficit on the health of the current economy.

Click play to watch the interview.

Republicans fear the U.S. could be setting itself up for future economic problems, if interest rates and inflation go higher.
    
They also worry about additional spending the administration is proposing, including its healthcare reform plan.

President Barack Obama and Treasury Secretary Timothy Geithner have said the U.S. is committed to bringing down the deficits once the economy and financial sector recover. The administration has set a goal of cutting the deficit in half by the end of his first term in office.

The deficit of $1.09 trillion so far this year compares to an imbalance of $285.85 billion through the same period a year ago. The deficit for the 2008 budget year, which ended Sept. 30, was $454.8 billion, the current record in dollar terms. 

Revenues so far this year total $1.59 trillion, down 17.9 percent from a year ago, reflecting higher unemployment, which cuts into payroll taxes and corporate tax receipts. 

Under the administration's budget estimates, the $1.84 trillion deficit for this year will be followed by a $1.26 trillion deficit in 2010, and will never dip below $500 billion over the next decade. The administration estimates the deficits will total $7.1 trillion from 2010 to 2019.

Source: Associated Press

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