U.S. on track for another $1 trillion-plus deficit

The budget deficit through the first eight months of the government’s budget year is running slightly below last year’s record-setting pace.

In its monthly budget report, the Treasury Department said Thursday that the deficit in May totaled $135.9 billion. That’s down 28.3 percent from May 2009. Much of that improvement reflected calendar differences that boosted receipts and lowered government benefit payments for the month.

Over the past eight months of the government’s budget year, the deficit totals $935.6 billion. That’s down 5.7 percent from the same period in 2009. While that is an improvement, it still puts the country on track to record another $1 trillion-plus deficit.

Many private economists are forecasting that the deficit for this year will come in around $1.3 trillion, which would still be the second-highest deficit in history. It would be down only slightly from last year’s all-time high of $1.4 trillion.

The Obama administration is forecasting that the deficit for the 2011 budget year, which begins Oct. 1, will remain above $1 trillion at $1.27 trillion. And it predicts the imbalances over the next decade will total $8.5 trillion.

The deficits have been driven higher by massive government spending to stabilize the financial system and counteract the impacts of the worst recession in decades. The Obama administration insists that the spending was necessary to keep the Great Recession from becoming a replay of the Great Depression of the 1930s.

However, the tide of red ink has sparked a political backlash. Surveys show rising unhappiness with the $13 trillion debt. That has put incumbent lawmakers on the defensive ahead of the midterm elections.