Budget Deficit | featured news

Administration estimates record-setting amount will drop to $1.3 trillion in 2011; Obama's proposed $3.8 trillion budget focuses on economy.

President Barack Obama renewed his pledge on Saturday to make job creation his top priority in 2010 but said it was also critical to rein in a record budget deficit that threatened economic recovery.

President Obama goes before Congress for his first State of the Union address Wednesday night to show he can boost the economy and create jobs this year while cutting the budget deficit in 2011.

Congressional experts pegged the 2010 budget deficit at $1.35 trillion, a slight improvement from the $1.38 trillion estimate in August, but the overall picture of the government's finances remains bleak.

Sen. John McCain will support President Obama's plan to freeze much of the federal budget for the next three years, but said the president must also promise to veto any bills that are stuffed with pork barrel spending items.

Facing another huge deficit, the governor wants $8 billion or threatens massive cuts in social services. He also plans to renew push for offshore oil drilling.

California faces a nearly $21 billion budget gap over the next year and a half, extending a fiscal crisis that already has led to steep cuts to public schools, social services and health programs.

The White House has told domestic agencies to assume their budgets will be frozen or even cut by 5 percent as it signals a big push to take on the deficit next year.

The United States must reduce its budget deficit and Asian nations must encourage more consumption to prevent a recurrence of the global imbalances that contributed to the financial crisis, Federal Reserve Chairman Ben Bernanke said Monday.

The US budget deficit more than tripled to a record $1.4 trillion in the year to 30 September, the US Congress estimates.