Washington, February 11: The US Treasury Department reports that America’s budget deficit has climbed to around $50 billion in January, as Congress debates how to tackle it.
Congress is set to discuss President Barack Obama’s 2012 fiscal year budget plan on Monday. The plan includes a five-year freeze on non-security discretionary spending that could lower the deficit by $400 million over ten years, Reuters reported.
The deficit is projected to reach $1.5 trillion in fiscal year 2011. Many blame the growing budget gap on the extension of Bush-era tax cuts and spending.
The size of the deficit may trigger a new standoff between Republicans and Democrats.
Republicans have proposed cutting nearly $58 billion from current spending levels, which could force layoffs at federal and state agencies and cut a number of domestic programs.
The US House Appropriations Committee Chairman Hal Rogers stated, “I have instructed my committee to include these deeper cuts, and we are continuing to work to complete this critical legislation.”
On Wednesday, the US Federal Reserve chairman also warned that the government’s budget deficit is unsustainable. Ben Bernanke defended the Fed’s monetary policies but said the long-term challenges of reducing the current budget gap are discouraging.
CIA Director Leon Panetta also expressed concern about the issue in an address to Congress regarding the deficit and national debt on Thursday, saying that “there’s no question that represents a threat that we need to pay attention to.”
——–Agencies