Spending Cuts Not Seen Denting $1.5 Trillion Deficit

The $38 billion in spending cuts agreed to last weekwon't prevent this year's budget deficit from setting another record high, estimated at $1.5 trillion.

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Most of the agreed-to spending cuts either affect only future budgets or amount to accounting gimmicks that won't reduce actual spending.

The Treasury Department reported Tuesday that the deficit already totals $829.4 billion through the first six months of the budget year — a figure that until 2009 would have been the biggest ever for an entire year. For March alone, the government ran a deficit of $188 billion.

The spending cuts nearly forced a government shutdown and were ultimately touted as the largest-ever for a single year. But David Wyss, chief economist at Standard & Poor's in New York, said the spending cuts amount to a "rounding error" in this year's deficit.

Wyss expects the deficit will surpass the record of $1.41 trillion hit in 2009.

The nonpartisan Congressional Budget Office raised its estimate earlier this year from $1.1 trillion to $1.48 trillion. It said the tax-cut package that includes a one-year reduction in the Social Security payroll tax would add $400 billion.

Still, the record deficit is likely to give Republicans more leverage in future spending debates, starting with the upcoming vote to raise the government's borrowing authority above $14.3 trillion.