19 Feb 2010

Commission to tackle US budget deficit

10:28 am on 19 February 2010

United States President Barack Obama has announced the formation of a bipartisan commission in an attempt to tackle the US budget deficit.

He says the growing debt could hinder the economy and cloud the future.

This year's deficit is expected to climb to 10.6% of GDP. Last year it reached 9.9%, the highest rate since World War II.

The US budget deficit for the year ending 30 September 2009 was $US1.415 trillion. It is expected to be a record $US1.56 trillion in 2010.

The BBC reports the size of the deficit is the result of the impact of a severe recession, which has cut government tax receipts and increased spending on programmes such as unemployment insurance and food stamps.

Government finances were also hit by the billions of dollars pumped into the economy in 2008 to stabilise the banking system.