Red ink rises in U.S.; EU eyes bigger IMF war chest

NEW YORK/BERLIN, (Reuters) – Red ink is rising to  record levels in the United States as bailout costs mount,  budget experts warned yesterday, while Europe sought to expand  funding to fight the burgeoning world financial crisis. European Union leaders meeting in Brussels agreed to  provide 75 billion euros ($103 billion) in new loans to the  International Monetary Fund as part of a Group of 20 effort to  boost the lender’s ability to fight global recession.

A draft of a declaration from EU leaders would urge G20  countries meeting in London on April 2 to beef up IMF resources  “so that the Fund can help its members swiftly and flexibly if  they experience balance of payment difficulties.” The actions showed the mounting costs of the world  financial turmoil.

In the United States, the Congres-sional Budget Office  forecast a record $1.8 trillion deficit for the fiscal year  that ends Sept. 30, or 13.1 percent of gross domestic product.

That could complicate President Barack Obama’s efforts to  convince lawmakers to pass his $3.55 trillion budget plan for  2010. [ID:nN20498067]

In January, the CBO forecast almost $1.2 trillion in red  ink for fiscal 2009.

The CBO also revised its forecast about accumulating  deficits over the next 10 years, saying they would total $9.3  trillion from 2010 to 2019, which drew immediate fire from  Republicans who have criticized Obama’s budget for its massive  new spending and tax increases on the wealthy.

“This debt buildup is due to massive spending that we  cannot afford, and deficits that go unaddressed,” said Senator  Judd Gregg, the senior Republican on the Senate Budget  Committee.

Around the Web