WASHINGTON – The United States is on course to have a record-shattering budget shortfall of nearly $1.5 trillion in 2011, according to the nonpartisan Congressional Budget Office.
The figure would be the largest US deficit ever in gross annual terms, despite years of top lawmakers from both major political parties hammering about the need to reduce the deficit.
The 2011 deficit clocks in at at 9.8 percent of gross domestic product, as opposed to 10 percent in 2009 and 8.9 percent in 2010, which were the largest since 1945, the last year of World War II that capped a period when spending was drastically ramped up.
The new CBO report pointed to "sharply lower revenues" and "elevated spending deriving from the financial turmoil" as the prime culprits of the rising deficit.
It noted the two-year extension of the Bush tax cuts – enacted under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 in December – as having impacted the 2011 deficit.
The CBO projections said federal revenues would rise in upcoming years if not for a change in current tax laws, in which taxes are slated to rise on all Americans to 1990s levels in 2013.
In Tuesday night's State of the Union address, President Barack Obama proposed a freeze in non-defense discretionary spending in 2011, which Republican lawmakers later criticized as insufficient but didn't specify what government programs to cut.
The Obama administration this month proposed $78 billion in military spending cuts over the next five years.
House Republicans recently passed a measure repealing the national health reform law enacted last year, an undertaking that would increase the deficit by roughly $230 billion by 2021, according to the CBO. But the Democratic-led Senate displayed no intention of taking up the bill.
David Stockman, a former budget director for President Ronald Reagan, weeks ago told Raw Story the United States had "reached the point of no return" with regard to its current trajectory of cutting taxes and spending heavily.