US budget deficit soars to $1.8tn

Bank and car-industry bailouts, jobless costs and lower tax revenues blamed for steep rise.

    Obama has faced congressional challenges
    over his budget proposals [EPA]

    Lower tax revenues, higher than expected costs for programmes such as unemployment insurance amid rising jobless figures and the cost of bailing out the US financial and automobile industries were also factors, one White House official told AFP.

    US stocks fell in mid-morning trading on Monday, with the Dow Jones Industrial Average down 128.16 points or 1.5 per cent, to 8,446.59 points.

    Reform plans

    While the Democratic-led US congress approved Obama's proposed budget for the 2010 fiscal year, which includes initiatives on healthcare and education, some moderate Democrats and many Republicans have expressed concern over the size of the deficit.

    In depth
    Obama has also unveiled new details of a plan to toughen tax policies for multinational companies investing abroad, along with plans to close lucrative loopholes on overseas tax shelters.

    Obama is also to oversee later on Monday a White House forum aimed at highlighting budget savings from a vast revamp of the country's ailing healthcare system.

    The US economy shrank at a surprisingly steep 6.1 per cent rate in the first three months of this year, raising fears that the US recession remains far from over.

    SOURCE: Al Jazeera and agencies


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