Federal Deficit Higher in July, $1.27T This Year

[Chris]

Federal Deficit Higher in July, $1.27T This Year
Record federal deficit climbs higher, $180.7 billion in July, $1.27 trillion so far this year

The Obama administration is projecting that when the current budget year ends on Sept. 30, the imbalance will total $1.84 trillion, more than four times last year's record-high.

So far, interest rates have remained low as the Federal Reserve has kept the federal funds rate, a key short-term interest rate at a record low near zero in an effort to jump-start the economy. At the end of a two-day meeting Wednesday, Fed officials repeated their view that the weak economy was likely to "to warrant exceptionally low levels of the federal funds rate for an extended period."

The concern, however, is that rates could begin rising despite the Fed's efforts if foreigners suddenly lose confidence in the government's ability to manage its debt burden.

http://abcnews.go.com/Business/WireStory?id=8312343&page=2

[thundley4]

The total public debt now stands at $11.6 trillion. Interest payments on the debt cost $452 billion last year, the largest federal spending category after Medicare-Medicaid, Social Security and defense.

Does this deficit include the $870B stimulus even though very little of it has been spent, or will that be added as it is spent.

[Chris]

Does this deficit include the $870B stimulus even though very little of it has been spent, or will that be added as it is spent.

Just a guess, but from looking at the numbers, I would say yes.  All the debt projections I've seen were updated as new spending bills were passed.

[AllosaursRus]

The concern, however, is that rates could begin rising despite the Fed's efforts if foreigners suddenly lose confidence in the government's ability to manage its debt burden.

"IF"???????

[thundley4]

"IF"???????

I would think that foreign governments which are holding the current debt, *cough * China* cough", are closely watching the health care debate.  Just the bill passing could have severe consequences even before it goes into effect.