WASHINGTON — The federal deficit through the first four months of the budget year is running at a record-breaking pace even though the deficit in January was slightly smaller than expected.
The massive tide of red ink reflects the continued fallout from a deep recession and a severe financial crisis. It highlights the formidable challenges President Barack Obama will face in trying to get the deficit down to more manageable levels.
The Treasury Department said Wednesday that the deficit for January totaled $42.63 billion. That left the total of red ink so far this budget year at $430.69 billion, 8.8 percent higher than last year when the deficit soared to an unprecedented level of $1.42 trillion.
Obama, in sending Congress a new budget plan on Feb. 1, projected that this year's deficit would hit $1.56 trillion and would remain above $1 trillion for three consecutive years. He forecast the 2011 deficit, for the budget year that begins next Oct. 1, would total $1.27 trillion.
The administration on Wednesday marked the anniversary of the passage of the $787 billion economic stimulus bill, maintaining that it has worked to stave off a second Great Depression while acknowledging that more must be done to put people back to work.
While Republican critics have attacked the stimulus spending as ineffective, Obama said it had kept up to 2 million people on the job and the government needed to do even more to fight an unemployment rate that currently stands at 9.7 percent.
However, the administration contends that it will begin to tackle the deficit problem beginning in 2011. In his budget, he offered a down-payment on deficit reduction,a three-year freeze on discretionary government spending outside of defense and homeland security.