Federal deficit in 2012 budget year tops $1T

Treasury Secretary Timothy Geithner's signature appears on a freshly printed $20 bill. / Mark Wilson/Getty Images

WASHINGTON The federal budget deficit has topped $1 trillion for a fourth straight year. But a modest improvement in economic growth helped narrow the gap by $207 billion compared with last year.

The Treasury Department said Friday that the deficit for the 2012 budget year totaled $1.1 trillion. Tax revenue rose 6.4 percent from last year to more than $2.4 trillion, helping contain the deficit.

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The government's revenue rose as more people got jobs and received income. Corporations also contributed more tax revenue than in 2011.

Government spending fell 1.7 percent to $3.5 trillion. The decline reflected, in part, less defense spending as U.S. military involvement in Iraq was winding down.

Barack Obama's presidency has now coincided with four straight $1 trillion-plus annual budget deficits - the first in history and an issue in an election campaign that ends in 3 1/2 weeks.

Obama's Republican challenger, Mitt Romney, contends that Obama failed to achieve a pledge to halve the deficit he inherited by the end of his first term.

When Obama took office in January 2009, the Congressional Budget Office forecast that the deficit for that year would total $1.2 trillion. It ended up at a record $1.41 trillion.

The increase was due, in part, to higher government spending to fight the worst recession since the Great Depression. Tax cuts enacted under President George W. Bush and wars in Iraq and Afghanistan contributed to the deficits.

The budget gaps in 2010 and 2011 were slightly lower than the 2009 deficit as a gradually strengthening economy generated more tax revenue. But the deficits still exceeded $1 trillion.

Obama is campaigning for a second term with a pledge to cut deficits by $4 trillion over the next decade. He says he would do so by ending the Bush-era income tax cuts for higher-income Americans and by restraining the growth of spending.

Romney has said he would cut spending growth to help narrow the budget gap. He would cap spending at 20 percent of the economy by 2016. Spending in 2012 accounted for about 23 percent of the economy.

The government borrowed about 31 cents of every dollar it spent in 2012. The string of $1 trillion-plus deficits has driven the national debt above $16 trillion. The magnitude of that figure has intensified debate in Congress over spending and taxes but little movement toward compromise.

Many fear the budget deadlock will send the economy over a "fiscal cliff" next year, when tax increases and deep spending cuts will take effect unless a budget deal is reached.

Obama wants to eliminate the income tax cuts for families that make more than $250,000.

Republicans in Congress and Romney have resisted. They argue that with the economy still weak, the government should not be raising anyone's taxes.

Congress may address the budget crisis during a lame-duck session of Congress after the November elections.

[ncrdbl1]

How many lies can be told in just one article? The treasury depart said the deficit for 2012 was $1.27 Trillion NOT $1.1 as you stated. The tax rate cuts did NOT cause the $1.41 trillion deficit Obama's first year. It was almost $1 trillion in stimulus spending that Obama piled onto Bush's last budget. Obama is following the same economic policies which FDR used to take a shallow depression and turn it into a 10 years monster. There were two US depressions in the 1920s. One was allowed to correct itself without government involvement and while originally much deeper, it was short lived.The second FDR got government control and it lasted for over 10 years and took WW2 to stimulate teh economy.

[hypnotoad72]

Giving taxpayer money to corporations that offshore (to communist countries), on top of their usual subsidies and entitlements, isn't going to fix the deficit, especially as the companies are not hiring here.

Now, all of that means more people in America are out of work as we're shipping jobs overseas. That also means we create a revenue problem because there are fewer working people to tax. That also leads to skill rot, which is okay since some Americans had to train their own H1B replacements anyhow...

Now, how can some of the more dingbatty policies be reversed? By congress or executive order, one would think...