Ahead of the Bell: US Budget Deficit
WASHINGTON (AP) — The U.S. government's budget deficit likely grew faster in November than in October and stayed on pace for another $1 trillion annual imbalance.
The Congressional Budget Office has estimated that the deficit — the gap between the government's tax revenue and its spending — totaled $172 billion in November. That would be 26 percent higher than the same month last year. And it would mean the U.S. has run up $292 billion in red ink just two months into the 2013 budget year.
The Treasury Department is scheduled to release the figure at 2 p.m. EST Wednesday.
A bigger deficit would add pressure to negotiations between President Barack Obama and Republican leaders in Congress to avert the "fiscal cliff. That's the package of huge tax increases and spending cuts scheduled to take effect early next year if a budget deal can't be reached before then.
The deficit, in simplest terms, is the amount of money the government has to borrow when revenues fall short of expenses. The government ran a $1.1 trillion annual budget deficit in the fiscal year that ended in September. That was lower than the previous year but still painfully high by historical standards.
Obama's presidency has coincided with four straight $1 trillion-plus deficits — the first in history and a record he had to vigorously defend during his re-election campaign. He had promised in February 2009 to cut the deficit in half by the end of this first term.
This year's deficit is closely tied to what happens with the fiscal cliff. Economists fear that the $671 billion in higher taxes and spending cuts, if left in place all year, would push the economy into a recession.
The two sides have traded proposals for an alternative budget deal. Obama has called for $1.6 trillion in new revenue over 10 years, partly by raising taxes on the wealthiest two percent of taxpayers. He has also recommended $400 billion in spending cuts over a decade.
House Speaker John Boehner, a Republican from Ohio, has offered $800 billion in new revenue and is calling for $1.2 trillion in spending cuts. House Republicans want to raise the revenue by closing loopholes rather than raising tax rates, as Obama is demanding.
The government has run annual deficits for more than a decade and hit a record $1.41 trillion in 2009, Obama's first year in office. That was largely because of the worst recession since the Great Depression. Tax revenue plummeted during the downturn, while the government spent more on stimulus programs.
The budget gaps in 2010 and 2011 were slightly lower than the 2009 deficit as a gradually strengthening economy generated more tax revenue.
President George W. Bush also ran annual deficits through most of his two terms in office after he won approval for broad tax cuts and launched wars in Afghanistan and Iraq.
The last time the government ran an annual surplus was in 2001.