CBO: Deficit is on track to be $1.3 trillion

The Congressional Budget Office on Friday said that the federal budget deficit is on track to be $1.3 trillion this year, $14 billion more than the deficit CBO predicted in August.

Despite all the wrangling in the spring between Republicans and Democrats about budget cuts, 2011 saw spending outlays increase by 4.2 percent compared to 2010. This included a 1 percent increase in defense spending and 1 percent increase in Medicaid spending.

{mosads}Medicare and Social Security spending rose by 4 percent, a foretaste of the ballooning in entitlement expenses expected to occur as baby boomers retire.

CBO said the change from the August estimate was due in part to certain payments being made in September rather than October and because revenue was $11 billion less than expected. The decline in revenue occurred in part due to delays in processing payments because of natural disasters, CBO said.

Final deficit numbers for fiscal 2011, which ended Sept. 30, will be out later this month from the Treasury Department.

Overall, the budget deficit will be 8.6 percent of the economy, making 2011 the third-highest year since the end of World War II, after 2009 and 2010. The 2009 deficit, which included the Obama stimulus spending package, was the highest, increasing to 10 percent of the economy.

The monthly deficit for September was $64 billion, $29 billion greater than in 2010.