US deficit less than predicted

The White House is to announce that the US government's deficit is about US$262bn (€184bn) less than was predicted early this year, but still three times bigger than last year's.

The lower figure is partly explained by the Obama administration providing less aid than expected to Wall Street.

The federal deficit this year will total $1.58 trillion (€1.1 trillion), a senior White House official said today. The official spoke anonymously to discuss the report before its release next Tuesday, when President Barack Obama will be on holiday in Massachusetts.

The non-partisan Congressional Budget Office is expected to release its mid-session review on the same day. It had estimated in June that it expected a deficit of $1.825 trillion (€1.28 trillion).

The report for the budget year that ends on September 30 also would predict Washington will spend $3.653 trillion (€2.565 trillion) this year, the official said. Revenue, however, would reach only $2.074 trillion (€1.456 trillion).

The midsummer report was supposed to have been released by mid-July, but was delayed, which led to speculation the White House was delaying the bad news until Congress left on its August recess.

Other administrations delayed releasing similar reports during their first year in office.

Mr Obama's budget had included a $250bn (€175.5bn) placeholder for a second bail-out of the nation's troubled banks, but did not ask Congress for it because of the fear that the administration was spending too heavily.

The administration also had anticipated failures of more banks, but the survival of most banks saved billions for Washington.

The report comes during a rough patch for Mr Obama's presidency. The rancour surrounding the Democrats' proposed health care overhaul also provides a distraction during a month-long break when much of Washington is in a lull.

The administration predicted this year that unemployment would peak at about 9% without a big stimulus package and 8% with one. Congress passed a $787bn (€552.6bn) two-year stimulus measure, yet unemployment soared to 9.4% in July and appears to be heading for double digits.

The nation's debt, the total of accumulated annual budget deficits, now stands at $11.7 trillion dollars (€8.21 trillion). In the scheme of things, that is more important than talking about the "deficit", which only looks at a one-year slice of book keeping and ignores previous indebtedness that is still outstanding.

Even so, the administration has projected that the annual deficit for the current budget year will hit the $1.58 trillion figure (€1.1 trillion), more than three times the size of last year's deficit of $455bn (€319.4bn).