WASHINGTON — The government ran a $1.3 trillion deficit for the budget year that ended last month, the third straight year it has operated more than $1 trillion in the red.
The 2011 budget deficit was the second-highest on record. It’s slightly ahead of the previous budget year’s $1.29 trillion deficit but below the $1.41 trillion imbalance record in 2009.
A decade ago, the government was running surpluses and trillion-dollar deficits seemed unimaginable. But those deficits now loom over tense negotiations in Washington.
Lawmakers are under pressure to agree by Thanksgiving on where they can cut $1.2 trillion over the next decade. If they cannot, automatic cuts to Medicare, defense spending and other critical areas of the budget would go into effect in January 2013.
For 2011, the government had to borrow 36 cents of every dollar it spent. The string of massive debts has made interest on that debt the fastest-growing budget category. For 2011, net interest payments rose 15.7 percent to $227 billion.
A slightly improved job market helped boost income-tax revenue this year. From October 2010 through last month, the economy added 1.3 million net jobs. That compares with only 339,000 net job gains in the previous 12-month period.
Still, that hasn’t been enough to bring the millions of Americans who lost jobs during the recession back into the workforce.
The government also lost revenue because of the 2 percentage point cut in Social Security taxes, and also it had to pay for an extension of emergency unemployment benefits. Congress approved both in December to boost the sluggish economy.
