Treasury announces 2011 deficit is second highest in history

The U.S budget deficit for fiscal year 2011 is $1.299 trillion, the second largest shortfall in history.

The nation only ran a larger deficit for the 2009 fiscal year, which included the dramatic collapse of financial markets and a huge bailout effort by the government. The nation's deficit that year was $1.412 trillion.

This year's deficit is slightly higher than fiscal year 2010, when the nation ran a $1.293 trillion deficit. Fiscal years run through Sept. 30. 

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Republicans have criticized President Obama for deficits that have skyrocketed since he took office. Much of the shortfall is from smaller tax returns, a result of high unemployment and falling incomes during the recession and a slow recovery. 

The GOP has also criticized spending programs, notably the $787 billion stimulus package of 2009, that were backed by the White House and congressional Democrats for rising deficits. 

Both parties have tried to get out front in proving their deficit-cutting credentials. Democrats and the White House have said higher taxes on the wealthy and corporations must be a part of deficit-reduction efforts, while Republicans have said no new taxes should be considered. 

The new figures were announced Friday by Treasury Secretary Timothy Geithner and Budget Director Jack Lew. 

The final 2011 deficit is $347 billion less than the estimate in the president’s February budget. Part of the improved picture was thanks to higher than expected revenue this year.

Revenue was $141 billion higher than in 2010. Spending was $145 billion above 2010, despite GOP efforts to cut the budget in the April spending deal. Many effects of those cuts are expected to be felt further down the road in terms of actually outlays.

In announcing the results, Geithner urged Congress to enact Obama’s deficit-reduction recommendations from September, which he said would shave $4 trillion off the deficit over 10 years.

“It follows a balanced approach: asking everyone to do their part, so no one has to bear all of the burden. And it says that everyone — including millionaires and billionaires — should pay their fair share,” Lew said.