US budget deficit to hit historic high

The US budget deficit will hit a record-breaking 1.5 trillion this year due in part to a recent tax cut deal, the Congressional Budget Office says.

The daunting numbers released on Wednesday mean that the US government will have to borrow 40 cents for every dollar it spends, according to the AFP.

The analysis predicted that joblessness in the country will remain above nine percent this year. The nonpartisan agency also estimated a nationwide unemployment rate of 8.2 percent on Election Day in 2012.

The deficit is on track to beat the record of $1.4 trillion set in 2009.

“The fiscal challenge confronting us is enormous. We can’t continue to put this off. We need to reach an agreement this year,” said Budget Committee Chairman Kent Conrad.

“We need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground,” he stressed.

The chilling figures come the morning after US President Barack Obama called for a five-year freeze on domestic agency budgets passed by Congress each year.

Those nondefense programs make up just 18 percent of the budget, which means any upcoming deficit reduction package will require politically dangerous curbs to popular benefit programs, including social security, the Medicare social insurance program for senior citizens, the Medicaid health care program for the poor and disabled, and food stamps.

Neither Obama nor his Republican rivals in Congress have yet come forward with any specific proposals for cutting benefit programs.