WASHINGTON — The federal deficit has topped $1 trillion with three months still to go in the budget year, showing the lasting impact of the recession on the government’s finances.
In its monthly budget report, the Treasury Department said Tuesday that through the first nine months of this budget year, the deficit totals $1 trillion. That’s down 7.6 percent from the $1.09 trillion deficit run up during the same period a year ago.
Worries about the size of the deficit have created political problems for the Obama administration. Congressional Republicans and moderate Democrats have blocked more spending on job creation and other efforts. Republicans also have held up legislation to extend unemployment benefits for the long-term jobless because of its effect on the deficit.
Another failed effort would have provided cash-starved states with money to help avoid layoff of public employees and finance the Medicaid program for the poor and disabled.
President Barack Obama also encountered resistance to further stimulus spending at a meeting of the Group of 20 major industrial nations last month in Toronto.
Obama expressed concerns about the risks to a fragile global recovery from withdrawing spending too soon. But the G20 adopted targets to cut deficits in half as a percentage of their economies over three years.
The deficit in the federal budget in June totaled $68.4 billion, the second- highest June deficit on record, but down from the all-time high of $94.3 billion in June 2009, a month when the government was spending heavily to stabilize the financial system and jump-start economic growth.
June is normally a surplus month as the government collects tax payments from corporations and individuals who make quarterly payments. Only seven years in the past 56 have seen deficits in June. Many private economists are forecasting that the deficit for the entire budget year, which ends Sept. 30, will come in around $1.3 trillion. That would be the second-highest deficit on record, but it would be down slightly from last year’s all-time high of $1.4 trillion.
Meanwhile, Republicans in the Senate are backing a plan to shave $20 billion from Obama’s budget for the upcoming fiscal year.
The cuts amount to about a 2 percent trim from the $1.13 trillion requested by Obama for agency budgets annually funded by Congress. Senate Budget Committee Democrats have proposed a $4 billion cut.
While small as a percentage of overall spending, the cuts represent an attempt by Republicans to respond to rising voter anger about spending and deficits. And it comes from an unlikely source: the Republicans on the Senate Appropriations Committee, many of whom are viewed with distrust by GOP conservatives as willing accomplices in spending taxpayer dollars and being prone to larding spending bills with pork barrel projects.
A letter signed by 12 Republicans on the panel says that they won’t vote for bills that don’t fit within their proposed $1.11 trillion spending cap.
