The Federal Deficit is at an All Time High

WASHINGTON - The
federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the dollar.

The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.

The soaring deficit is making Chinese and other foreign buyers of U.S. debt nervous, which could make them reluctant lenders down the road. It could also force the Treasury Department to pay higher interest rates to make U.S. debt attractive longer-term.

"These are mind-boggling numbers," said Sung Won Sohn, an economist at the Smith School of Business at California State University. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."

The Treasury Department said Monday that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to $1.09 trillion. The administration forecasts that the deficit for the entire year will hit $1.84 trillion in October.

Good grief. This is Obama's economy, no longer can Bush be blamed, this is the direct result of the Obama administrations action, as well as the Democratic controlled congress. Where is the stimulus? Where are the millions of jobs that were supposed to be created? Job losses continue to grow every month. Our debt is at record levels. The economy keeps sinking, and what do the Democrats propose? More spending, in the form of another stimulus package. (Excuse me a moment while I pound my head against the desk.)