The federal budget deficit has topped $1 trillion for the fourth consecutive straight year in the fiscal year that ended Sept. 30. The deficit is likely to fuel further debate over tax and spending policies for the presidential election. The debt spending was roughly 7.0% of the country’s 2012 gross domestic product, a measure of the total output of goods and services, the Treasury Department said Friday.
That is the lowest share since President Barack Obama took office, but still one of the largest since World War II.
The 2012 budget gap was down from the 2011 deficit of $1.297 trillion, or 8.7% of GDP. The deficit peaked in 2009 at $1.413 trillion, or 10.1% of GDP.
The deficit declined last year due to growing tax revenue and falling spending. Federal spending fell for several reasons, including the expiration of temporarily higher Medicaid payments, a decline in unemployment benefits and reduced military spending. Still, government spending as a share of the economy hit 22.7% in 2012. That is lower than in 2009, 2010 and 2011, but higher than any other year since 1985.
Tax revenue fell sharply during the financial crisis and recession while spending jumped, both because government officials launched programs to boost the economy and because of safety-net programs that kicked in when unemployment got worse. Democrats and Republicans have clashed for years over how to reduce the deficit, leading to finger-pointing on the campaign trail.
Running big annual deficits means the government must borrow money to fund its operations, adding to the country’s debt. Total government debt on Thursday hit $16.119 trillion, just shy of the statutory borrowing limit of $16.394 trillion.
The government is expected to hit this limit, known as the debt ceiling, in late December. This year Treasury officials are expected to implement emergency measures to buy the government more time to avoid missing payments until Congress can reach an agreement to raise the ceiling.