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US government deficit rises sharply in October | US government deficit rises sharply in October |
(about 1 hour later) | |
The US government's budget deficit rose sharply in October, highlighting the financial challenge President Barack Obama faces following his re-election. | The US government's budget deficit rose sharply in October, highlighting the financial challenge President Barack Obama faces following his re-election. |
The deficit increased 22% from a year earlier to $120bn (£75bn) as government spending outpaced tax revenues. | The deficit increased 22% from a year earlier to $120bn (£75bn) as government spending outpaced tax revenues. |
It comes as politicians debate how to deal with the so-called fiscal cliff of automatic tax increases and spending cuts due to take effect in January. | It comes as politicians debate how to deal with the so-called fiscal cliff of automatic tax increases and spending cuts due to take effect in January. |
The White House and Congress are trying to agree a more orderly deficit cut. | The White House and Congress are trying to agree a more orderly deficit cut. |
The deficit is the amount by which government spending exceeds its tax revenues, with the government needing to borrow the difference. | The deficit is the amount by which government spending exceeds its tax revenues, with the government needing to borrow the difference. |
On Tuesday the US Treasury Secretary, Timothy Geithner, warned against extending all of the tax breaks that are due to expire in January as a way of giving Washington more time to broker a deal on the deficit. | On Tuesday the US Treasury Secretary, Timothy Geithner, warned against extending all of the tax breaks that are due to expire in January as a way of giving Washington more time to broker a deal on the deficit. |
Mr Geithner claimed doing this would create more uncertainty in the financial markets. | Mr Geithner claimed doing this would create more uncertainty in the financial markets. |
"It will leave a different source of uncertainty, which is what's going to give people the incentive to come back and do something tough," he said. | "It will leave a different source of uncertainty, which is what's going to give people the incentive to come back and do something tough," he said. |
Among the measures due to expire are the income tax cuts for high income earners originally introduced by former President George W Bush, which have been vociferously defended by Republicans in Congress. | Among the measures due to expire are the income tax cuts for high income earners originally introduced by former President George W Bush, which have been vociferously defended by Republicans in Congress. |
"The government needs to increase its revenues, and it needs to cut its expenses," Jim Lebenthal, a fund manager in New York, told the BBC. "It's not an either/or. | |
"There's no way that one side of that equation can carry the day, not with the size of the deficits we have." | |
The US government accumulated a total budget deficit of $1.1tn in the last fiscal year, that ended in September, or 7% of GDP. | The US government accumulated a total budget deficit of $1.1tn in the last fiscal year, that ended in September, or 7% of GDP. |
That was lower than the previous year, but still very high by historical standards. | That was lower than the previous year, but still very high by historical standards. |
According to the non-partisan Congressional Budget Office, if the White House and Congress can reach a budget deal that extends the tax cuts and avoids reductions in spending, the deficit will be about $1 trillion for this budget year. | According to the non-partisan Congressional Budget Office, if the White House and Congress can reach a budget deal that extends the tax cuts and avoids reductions in spending, the deficit will be about $1 trillion for this budget year. |
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