By Walter Alarkon - 03/09/10 03:43 AM EST
The government spent through February $1.45 trillion, the same amount that it spent last year over the same period. Spending on unemployment benefits nearly doubled, rising from $36 billion in the first part of 2009 to $69 billion this year, while defense and entitlement costs saw lesser increases. But the extra costs were offset by a sharp drop in bailout spending. The government has spent just $9 billion under the bank bailout, officially known as the Troubled Asset Relief Program, compared to $113 billion spent last year.
The Obama administration has forecast a deficit of $1.56 trillion this year, which would be a record in nominal dollars. That deficit would be equivalent to nearly 11 percent of the country's economy, the highest level since the post-World War II era. The White House budget predicts the deficit to fall to roughly 4 percent of the economy over the next decade as the economy recovers, federal spending on stimulus and bailouts ends and Bush-era income tax cuts expire.
To chart a path to a deficit equal to 3 percent of the economy, the level the administration considers sustainable, President Barack Obama has created a bipartisan commission of lawmakers and outside experts. Democratic congressional leaders have pledged to hold votes on the commission's recommendations after the midterm elections.