The US budget deficit has long
since graduated from a mere
threat to a serious economic crisis. It has become so humongous
that some experts are dubbing it as a national security threat.
Whatsoever, huge deficit means that US has to sell
a lot of treasury-bonds to finance its deficits, though at the cost of higher
interest rates. Undeniably, though the economy has weathered the
recession, it is still on a slow recovery process. The labor market too has
remained weaker than forecasted—unemployment rose to 10% in 2009. And
thus, the priorities of the government have shifted to deficit containment as
well as to create more and more employment opportunities and to
continue with the recovery process.
Given these challenging ground realities, coupled with the sheer size
of the US economy and the profound impact it has had on the rest of the
world, the US President Barack Obama has proposed a $3.8 tn budget for 2011.
The budget has made provision for measures aimed at creating jobs—$100
bn in additional stimulus spending—and it has projected that this year's
deficit will touch a staggering $1.6 tn. The deficit forecast for the current year
represents 10.6% of the GDP, making it the biggest since World War II. The
deficit in 2009 was $1.4 tn. However, it has also been predicted that the deficit
will fall below 4% of GDP by 2014.
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