Stimulus plans enacted by presidents Bush and Obama, which were designed to help move the nation out of the continuing recession, are taking their toll on the federal budget deficit. The Obama administration recently announced that his proposed policies will raise the overall budget deficit to $1.4 trillion. Obama’s plans to reform the healthcare and education systems, as well as energy policy, may become more difficult if Congress refuses to support increased spending.
The $1.4 trillion figure represents a dramatic change from the deficit figures of previous years. This deficit figure measures 10% of the gross domestic product (GDP) of the United States. The previous year’s deficit measured only 3.2% of the GDP. The 10% figure is the highest since the end of World War II, when the deficit measured more than 21% of the GDP.
Presidents Bush and Obama both produced budgets that included large amounts of money directed to protecting the U.S. economy and other heavily invested nations. Some analysts worry that increased deficits will lessen confidence in the U.S. ability to repay its debts. This would mean that nations who loan money to the United States could charge higher interest rates on the loans.
Related Links
- $1.4 Trillion Deficit Complicates Stimulus Plans
This article outlines the figures of the budget, deficit, and proposed deficit of both presidents Bush and Obama, and how they compare to each other. (Source: New York Times, October 26, 2009) - As Deficit Grows, So Do Doubts
This article describes the ways in which the budget deficit might affect the value of the dollar in other nations. (Source: Wall Street Journal, October 26, 2009) - Obama Raises 10-Year Deficit
This article describes the effect the yearly deficit will have on the 10-year projected deficit, and the reasons the increase may result in higher taxes. (Source: Reuters, October 26, 2009) - Deficit Expected to Swell
This article contains information about the different estimates of the presidential budget and the Congressional Budget Office and includes reactions to the news by both Democratic and Republican officials. (Source: Washington Post, October 26, 2009)