Tags: us | debt | crisis

U.S. Borrows 41 Cents Per Dollar It Spends

Monday, 26 Jul 2010 11:25 AM

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, The Washington Post reports.

Contrary to official projections, the budget gap will not begin to narrow much in 2011 because of an unexpectedly big drop in tax receipts, a circumstance Obama administration opponents are using to political advantage.

In its semiannual fiscal outlook, the White House budget office acknowledged that "the U.S. economy still faces strong headwinds," that include tight credit markets, a huge housing inventory, and state governments struggling with budget deficits.

Christina Romer, chairman of the president's Council of Economic Advisers, said economic turbulence in Europe has also had an impact, "ever so slightly dampening growth prospects in 2011."

The new forecast had a mixed impact on deficit projections.

For 2010, lower spending than expected on unemployment benefits and bank deposit insurance led to a lower deficit projection, but lower tax receipts raised deficit projections for 2011 and 2012.

The report also said that, "despite these headwinds, the administration expects economic growth and job creation to continue for the rest of 2010 and to rise in 2011 and beyond."

However, the long-term forecast remained largely unchanged, with the White House predicting additional borrowing of $8.5 trillion through 2020.

That amount would drive the national debt to more than 77 percent of annual economic output, the highest percentage since 1950.

The Congressional Budget Office says that number will probably be significantly higher if current policies remain unchanged.

The CBO also reveals that it costs taxpayers $1.78 in ethanol "incentives" to reduce U.S. gasoline consumption by one gallon — or nearly two-thirds of the current average retail gas price, The Wall Street Journal reports.

Reducing carbon emissions by one metric ton via ethanol costs $754, while the price for a ton of carbon under the cap-and-tax program that the House passed last summer would be about $26 in 2019, the newspaper reported.

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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, The Washington Post reports. Contrary to official projections, the budget gap will not begin to...
us,debt,crisis
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2010-25-26
Monday, 26 Jul 2010 11:25 AM
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