Thursday, Dec 11, 2008
The US government faces an unprecedented budget deficit of USD 1 trillion or more as the ongoing recession takes its toll on the economy.
Data released by the US Treasury Department on Wednesday revealed that the federal government ran a record deficit last month, which hints at a 13 digit figure for this budget year.
The deficit reached USD 401.6 billion in the first two months of the budget year (beginning on October 1), just a fraction under USD 455 billion gap posted for all of last year.
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If the deficit passes the USD 1 trillion mark, it would also be the highest post-World War II shortfall when measured as a percentage of the economy.
The high budget gap has roots in both lower tax income and extremely lavish bailout policies that the US government has pursued since the beginning of the economic recession.
Recent figures have shown that the US government is ready to inject up to USD 7 trillion of taxpayers’ money into the slumping economy to save ailing financial institutions from total bankruptcy.
The latest massive government handout is a USD15-billion bailout plan for the auto industry, which was approved by the US House of Representatives on Wednesday.
Prior to House approval, the plan attracted criticism from many recognized figures such as Microsoft founder and multi-billionaire Bill Gates.
“After all, they have to say if no one else is willing to invest, why is that?… What is it that investors are seeing about this business model or cost structure that makes them unwilling, and why, in that case, is the government alone stepping forward in this way,” Gates said in a televised interview last week.
“When you don’t have any private investors you really have to say, is taxpayer money going to have the desired effect?” he added.
This article was posted: Thursday, December 11, 2008 at 5:04 am