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According to US congress estimates, US budget deficit is expected to reach $1.35 trillion in 2010. “In 2009, the US deficit hit a record $1.4tn – equal to 9.9% of gross domestic product (GDP) – and the highest since the end of World War II.”
I think the reason for this sky-rocketing deficit are the following:
- an imbalance between revenues and spending that predated the recession
- sharply lower revenues and higher spending in the recession
- the costs of various federal policies implemented in response to the global downturn.
This also is what Congressional Budget Office (CBO) said was the reason.
World economy is slowly starting to recover, however, this was possible with borrowing money from banks. It may seem the economy is improving, however, this ‘deficit’ could be an economic bomb if they keep growing. As economy gets better, United States should have a new budget plans keeping the spending lower than the revenue to halt and minimize the deficit.