U.S. deficit tops $1 trillion for 4th straight year
WASHINGTON — The United States has now spent $1 trillion more than it's taken in for four straight years.
The Treasury Department confirmed on Friday what was widely expected: The deficit for the just-ended 2012 budget year — the gap between the government's tax revenue and its spending — totaled $1.1 trillion. Put simply, that's how much the government had to borrow.
The 2012 budget gap was $1.089 trillion, narrower than last year's deficit of $1.297 trillion because of higher corporate income tax receipts and less spending, the Treasury Department said.
The deficit equaled 7.0 percent of economic output, down from 8.7 percent last year, the department said. Economists generally consider deficits exceeding 3.0 percent of gross domestic product to be unsustainable in the long term.
It wasn't quite as ugly as last year. The government reported a budget surplus for the final month of the 2012 fiscal year.
Tax revenue rose 6.4 percent from 2011 to $2.45 trillion. And spending fell 1.7 percent to $3.5 trillion. As a result, the deficit shrank 16 percent, or $207 billion.
A stronger economy meant more people had jobs and income that generated tax revenue. Corporations also contributed more to federal revenue than in 2011.
The government spent less on Medicaid and on defense as military involvement in Iraq was winding down.
Barack Obama's presidency has coincided with four straight $1 trillion-plus annual budget deficits — the first in history and an issue in an election campaign that ends in 3½ weeks.
When Obama took office in January 2009, the Congressional Budget Office forecast that the deficit that year would total $1.2 trillion. It ended up at a record $1.41 trillion.
The increase was due in large part to the worst recession since the Great Depression. Tax revenue plummeted, and the government spent more on stimulus programs.
Tax cuts enacted under President George W. Bush and military spending in Iraq and Afghanistan contributed to the deficits.
“There is nothing like the number trillion to focus the mind,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates budget discipline. “The fiscal situation is terrible. Changes will have to be made as quickly and carefully as possible.”