Q&A: AMERICA’S BIG DEFICIT

Q. HOW BIG IS THE US GOVERNMENT’S ANNUAL DEFICIT?

A. Around $1.6 trillion (£984bn), for the current fiscal year – roughly 11 per cent of America’s GDP.

Q. WILL IT BE CUT?

A. For fiscal year 2011, government spending is expected to edge down on slightly, from $3.8 trillion to $3.7 trillion. Government receipts of $2.6 trillion are expected – leaving an annual deficit of $1.1 trillion.

Q. WHAT IS THE US GOVERNMENT SPENDING THE CASH ON?

A. In short -- welfare programmes (over $2 trillion in the next fiscal year), the wars (a Defence budget of more than $0.75 trillion), and interest payments on government debt which could hit $250bn.

Q. WILL US FEDERAL SPENDING COME UNDER CONTROL?

A. President Obama’s plan aims for the annual deficit to be reduced to three per cent of GDP by 2014. In the UK, Chancellor Osborne aims to eradicate the annual deficit entirely by the end of the parliamentary term.

Q. WILL THE DEFICIT REDUCTION PLAN WORK?

A. Some commentators say the plan relies optimistically on economic growth, while long term costs remain a problem. Medicare spending will surpass $600bn by 2015.