US fiscal deficit tops $1 tn for first time
WASHINGTON: Nine months into the fiscal year, the federal deficit has topped $1 trillion for the first time. The imbalance is intensifying fears about higher interest rates and inflation, and already pressuring the value of the dollar. There’s also concern about trying to reverse the deficit, by reducing government spending or raising taxes, in the midst of a harsh recession.
The Treasury Department said on Monday that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to nearly $1.1 trillion.
The deficit has been propelled by the huge sum the government has spent to combat the recession and financial crisis, combined with a sharp decline in tax revenues
. Paying for wars in Iraq and Afghanistan also is a major factor.
America’s soaring deficits are making Chinese and other foreign buyers of US debt nervous, which could make them reluctant lenders down the road. It could force the Treasury Department to pay higher interest rates to make US debt attractive longer-term.
source: economic times
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