Page last updated at 20:40 GMT, Friday, 20 March 2009

US deficit 'to hit $1.8 trillion'

Wall Street
The US government has had to spend billions bailing out financial institutions

The US budget deficit will hit $1.8tn (£1.25tn) this year, a record amount, according to US Congress estimates.

The White House said the prediction by the Congressional Budget Office (CBO) would not alter President Barack Obama's policy agenda.

Nor would it affect its goal to cut the deficit in half by 2013, it added.

The CBO also predicted that President Obama's budget would result in a total deficit of $9.3tn over 2010-2019, worse than the White House had anticipated.

The massive deficit forecasts come after President Obama's $3.55 trillion budget plan for the 2010 financial year, which includes big spending programmes to address healthcare and education and to curb greenhouse gas emissions.

The CBO also issued gloomy forecasts for the US economy, projecting that it will contract 3% in 2009 before growing 2.9% next year and expanding 4% in 2011.

Republican Senator Chuck Grassley said that the administration should curb its spending initiatives.

"The buck stops with the American taxpayer. People can afford only so much government spending, even for the worthiest-sounding causes," he said.

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