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January 27, 2011 6:48 pm

Record Federal Deficit Set to Reach $1.5 Trillion

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WASHINGTON — The government’s budget deficit will soar to nearly $1.5 trillion this year, the nonpartisan Congressional Budget Office said Wednesday, an anticipated but politically galvanizing estimate that intensified the partisan battle over the nation’s fiscal future.

The $1.5 trillion deficit projection is $414 billion higher than its previous estimate, in August, and reflects in part the tax cut deal last month between President Barack Obama and Republicans. The deficit was $1.4 trillion in 2009 and $1.3 trillion in 2010.

The budget office also said that after decades of Social Security surpluses, the program’s costs are no longer covered by payroll taxes.

The budget estimates will add fuel to the already-raging debate over spending and looming legislation that would allow the government to borrow more money as the national debt nears the $14.3 trillion cap set by law.

Republicans controlling the House say they won’t raise the limit without significant budget cuts, starting with a government funding bill that will advance next month. Senate Republicans also said they would press again for a constitutional amendment requiring balanced federal budgets.

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