U.S. budget gap hits $1.1 trillion to date

WASHINGTON Wed Aug 10, 2011 3:11pm EDT

WASHINGTON (Reuters) - The United States is running a $1.1 trillion budget deficit to date in the current fiscal year, the Treasury Department said on Wednesday, as lawmakers began to seek extra cuts in public spending to rein in debt.

The budget deficit, 10 months into the government's fiscal year, was $69 billion lower than the same period a year earlier, said the Treasury Department.

"The government continues to run significant deficits, one of the reasons S&P took its rating action," said Thomas Simons, money market economist with Jefferies & Co in New York.

The U.S. budget deficit is forecast to reach $1.4 trillion, according to the Congressional Budget Office.

In July, the government posted a budget deficit of $129 billion -- the 34th consecutive month of budget shortfalls.

A special committee of Democratic and Republican lawmakers have been charged with finding $1.5 trillion in budget savings over the next decade.

(Reporting by Rachelle Younglai; Editing by Neil Stempleman and Andrew Hay)

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Comments (1)
JohnSimple wrote:
Suppose you spend more money this month than your income. This situation is called a “budget deficit”. So you borrow (ie; use your credit card). The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you spend more on goods manufactured in China than your income, another deficit, you must borrow some more, and you’ll still have to pay the interest on your debt (now larger). If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don’t have any money left over for anything else. This situation is known as Bankruptcy.
Get an idea where we are heading?

Aug 11, 2011 9:52pm EDT  --  Report as abuse
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