The Treasury reported a nearly $1.3 trillion deficit for 2010, down from 2009 but still the second-largest in more than 60 years, adding fuel to this year’s political debate about the size of deficits and government.
The Treasury Department said today that the U.S. budget deficit shrank in fiscal 2010 by $122 billion. John McKinnon takes a look at the role the near-record deficit is likely to play in the upcoming election.
The government also announced that, for the second year in a row, Social Security recipients wouldn’t receive a cost-of-living adjustment, because inflation levels have fallen so low in the current economy.
Taken together, the latest announcements could increase the political fallout from the toxic combination of high deficits and low growth.
“If you want to know what’s driving the anger out there, there’s no issue that people are more concerned about than the fiscal condition of the country and the effect it’s having on potential prosperity,” said Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee.
The 2010 deficit was so high because of continued weakness in revenue, which is still 14% below 2008 levels, and a 16% increase in outlays over 2008, largely a result of stimulus and safety-net spending, such as unemployment benefits.
Obama administration officials said that they had made progress shoring up the economy through policies including the stimulus, and that they had reduced costs associated with financial-bailout programs.