U.S. Red Ink Tops $1T for First Time Ever

Growing Federal Deficit is Intensifying Fears about Higher Interest Rates and Inflation

(AP)  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 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 U.S. debt nervous, which could make them reluctant lenders down the road. It could force the Treasury Department to pay higher interest rates to make U.S. debt attractive longer-term.

"These are mind boggling numbers," said Sung Won Sohn, an economist at the Smith School of Business at California State University. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."

Government spending is on the rise to address the worst financial crisis since the Great Depression of the 1930s and an unemployment rate that has climbed to 9.5 percent.

Congress already approved a $700 billion financial bailout and a $787 billion economic stimulus package to try and jump-start a recovery, and there is growing talk among some Obama administration officials that a second round of stimulus may be necessary.

This has many Republicans and deficit hawks worried that the U.S. could be setting itself up for more financial pain down the road if interest rates and inflation surge. They also are raising alarms about additional spending the administration is proposing, including its plan to reform health care.

President Barack Obama and other administration officials, including Treasury Secretary Timothy Geithner, have said the U.S. is committed to bringing down the deficits once the country has emerged from the current recession and financial crisis.

[noloyalisti]

Yeah, you ain't seen nothing yet. This is only the beginning of the second Great Republican Depression in less than 100 years.

That is what happens when you listen to the great spinster Reagan with his failed privatization, deregulation and "trickle-down" fiascos. The very idea that big corporations can run anything right is preposterous.

[vietnamwar]

Ever hear the song....... "You aint seen nothing yet"????? Just wait!

[vietnamwar]

This must be the "CHANGE" everyone was talking about last fall. Shout it in the streets! "The Change is here!! The Change is here!!"

[ibsteve2u]

Pretty slick, really.

Use too small of a force initially, to keep projected costs down. That protects your tax cuts, and simultaneously permits you to institutionalize running a war "off the books" - after all, the war's life time was only going to be, as Rumsfeld put it: "It could last six days, six weeks. I doubt six months."

Pretty bad prediction, eh? Even for a political animal? All unintentional, like?

lolll...especially since it wasn't long after that that it became evident to me that the war was being conducted according to PNAC's play book, which called for the permanent garrisoning of the Middle East.

And then Republican candidates started talking about 100 years...it was like watching a slot machine line up - except nothing good for America came tumbling into the payoff box.

[payasyougo]

So far this thing has pretty much gone as expected.

House valuation has evaporated about as fast as "taken for granted" tax revenue. Corporations have downsized to account for the lower revenue projections but Federal and State governments still have their head in the sand.

As long as the Federal government keeps bailing out state governments with your grandchildren's future tax payments, why would anyone getting bailed out change their behavior.

Give your credit card to your sixteen year old while you pay the balance for whatever he spends. When do you think he'll quit charging stuff? When you can't afford to pay his bill.

Right now Obama is charging up all kinds of credit that your grandchildren can't afford.

The only one's saying a deficit is acceptable are the one's who won't be here to pay the tab.

If you are late on your house payments, get your kid to cosign a loan for you so you can make payments. Now your kid is on the hook when you still can't make payments. The only difference between this scenario and the national debt is you think you are not on the hook for the national debt.

Just keep watching. This script is easy to read.

[ibsteve2u]

Our deficit used to worry me...but then Bush, Cheney, & PNAC, LLP began running the red ink.

Then, they started a war - and, most curiously, ran it "off the books" to keep its costs from being controlled by law.

At that point, I decided that they were pulling a scam: Intentionally running the debt up in the hopes that somewhere down the road, bad things would have to be done.

Bad things, like privatizing ever more government functions - in effect, requiring America to pay taxes directly to those the Republicans represent.

Bad things, like forcing Social Security onto the stock market - where it could be expeditiously separated from America's people, as our 401Ks and pensions were.

At that point, I decided that it didn't matter if we ran a huge and monstrous deficit...better that, than to have the nation bent over the log by the Republicans.

[whitemale08]

Is it any suprise that trying to bail out 1.4 quadrillion in worthless derivatives and credit-default swaps would do this?

You can thank the puppet of the British Empire for suckering the taxpayer into bailing out Goldman Sucks JP Morgan AIG, BoA, Citicorpse and others.

WE'RE RUNNING OUT OF TIME FOLKS!!!

CALL CONGRESS AND DEMAND THAT THE BAIL OUTS STOP IMMEDIATELY!!!!

[noloyalisti]

Hard to believe anyone is ignorant enough to blame Obama after the failed economic policies of Reagan that was put on steroids by Bushoccio.

Yes, the GOP has robbed us blind, turned over all our money to the rich and put us in the second great Republican depression in 90 years. Way to go Organized GOP Crime Family.

[TheMasses0009]

Sorry for my absence box-bud.
My boxed estate was washed away during the great rains here in FL. I washed away for appx. 1,000 miles and ended up at TX. My rats survived and we are rowing our way back to FL. The portraits of Jimmy the Great and Michelle were washed away though.

[beaumuff]

Yep, its me. sorry about you hard luck.I would be in tears if I were you. My box got run over by a run away beer truck but but Jimmy survived with only a few scrathes. when obama comes to insulate it everything will be ok.

[TheMasses0009]

You're still here then speciality8?