WASHINGTON — A new estimate puts the deficit for the just-completed 2012 budget year at $1.1 trillion, the fourth straight year of trillion dollar deficits on President Barack Obama's watch.

The result was a slight, $207 billion improvement from the 2011 deficit of $1.3 trillion.

The bleak figures from the Congressional Budget Office, while expected, add fodder for the heated presidential campaign, in which Obama's handling of the economy and the budget is a main topic. Friday's release came as the government announced that the unemployment rate dropped to 7.8 percent last month, matching the rate when Obama took office.

"President Obama once promised to cut the deficit in half by the end of his first term, but ... he's broken that promise, and has presided over his fourth straight trillion-dollar budget deficit," said GOP vice presidential nominee Rep. Paul Ryan, R-Wis. "The President's reckless spending habits have burdened the American people with another $5.4 trillion in debt while failing to bring a real recovery for the 23 million Americans struggling for work or the 15 percent of Americans living in poverty."

The 2012 deficit was 7 percent of the size of the economy, an unsustainably high level. The figure is lower than the first three years of Obama's presidency, but higher than any other year since 1947.

The administration will release the official deficit numbers around mid-October, but they should line up closely with the CBO estimate, which showed that the government borrowed 31 cents for every dollar it spent.

The CBO estimate predicts a modest 3 percent increase over 2011 in both income tax and payroll tax receipts, reflecting the sluggish economic recovery. Corporate income tax receipts are way up – almost 34 percent – but most of that is a result of tax rules governing write-offs of business equipment.

Spending fell across a broad array of categories, the CBO said, but not Social Security and Medicare. Social Security payments rose by 6 percent, while Medicare grew by 3 percent, slightly less than in prior years.

Lower war costs meant a 3 percent decline in defense outlays, however, and the cost of unemployment benefits dropped 24 percent because fewer people have been receiving benefits recently. Medicaid costs dropped as well, because the federal government stopped paying a higher share of the program's costs.

Obama inherited an economy in recession and a deficit in excess of $1 trillion. He promised to cut the deficit in half by the end of his first term, but deficits have instead remained at eye-popping levels, including a record $1.4 trillion deficit in 2009 and deficits of $1.3 trillion in each of the past two years.

In Wednesday night's debate, Obama said he has a budget plan to shave $4 trillion from the deficit over the coming decade, but he counts $1 trillion from savings already accomplished in budget deals with Republicans last year and $848 billion from winding down wars in Iraq and Afghanistan.

Republican presidential nominee Mitt Romney promises to balance the budget within eight to 10 years, but hasn't illustrated how he would do so. His budget claims are suspect as well since he promises to cut the overall budget by about $500 billion in 2016 alone, while also promising to sharply boost military spending and restore more than $700 billion in Democratic cuts to Medicare over the coming decade. Romney has ruled out increasing taxes.

Congress is looking toward addressing the deficit at the end of the year, but any such effort would actually increase the deficit since lawmakers promise to restore most or all of Bush-era tax cuts that are set to expire Dec. 31. Lawmakers also want to head off $109 billion worth of automatic spending cuts set to hit the Pentagon and domestic programs in January. Republicans and Democrats disagree on whether part of the effort to replace this so-called sequester should include tax increases on upper-income earners.

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  • The Deficit Has Grown Mostly Because Of The Recession

    The deficit has ballooned not because of specific spending measures, but <a href="http://research.stlouisfed.org/fred2/graph/?s[1][id]=FYFSD" target="_hplink">because of the recession</a>. <a href="http://www.whitehouse.gov/omb/budget/Historicals" target="_hplink">The deficit more than doubled</a> between 2008 and 2009, as the economy was in free fall, since laid-off workers paid less in taxes and needed more benefits. The deficit then shrank in 2010 and 2011.

  • The Stimulus Cost Much Less Than Bush's Wars, Tax Cuts

    Republicans frequently have blamed <a href="http://projects.nytimes.com/44th_president/stimulus" target="_hplink">the $787 billion stimulus</a> for the national debt, but, when all government spending is taken into account, the stimulus frankly wasn't that big. In contrast, <a href="http://www.huffingtonpost.com/2011/06/29/cost-of-war-iraq-afghanistan_n_887084.html" target="_hplink">the U.S. will have spent nearly $4 trillion</a> on wars in the Middle East by the time those conflicts end, according to a recent report by Brown University. <a href="http://www.washingtonpost.com/blogs/fact-checker/post/revisiting-the-cost-of-the-bush-tax-cuts/2011/05/09/AFxTFtbG_blog.html" target="_hplink">The Bush tax cuts have cost nearly $1.3 trillion</a> over 10 years.

  • The Deficit Grew Under George W. Bush

    When George W. Bush took office, <a href="http://www.whitehouse.gov/omb/budget/Historicals" target="_hplink">the federal government was running a surplus</a> of $86 billion. When he left, that had turned into a $642 billion deficit.

  • The Deficit Is Shrinking

    <a href="http://www.whitehouse.gov/omb/budget/Historicals" target="_hplink">Last year's federal budget deficit</a> was 12 percent lower than in 2009, according to the Office of Management and Budget.<a href="http://www.whitehouse.gov/omb/budget/Historicals" target="_hplink">The deficit is projected to shrink</a> even more over the next several years.

  • Investors Are Paying Us To Borrow Money

    <a href="http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield" target="_hplink">The interest rate on 10-year Treasury bonds</a> is <em>negative</em>, according to the Treasury Department. Investors are even paying us for 30-year Treasury bonds, when adjusted for inflation.

  • Investors Are Not Running Away

    <a href="http://www.businessinsider.com/niall-ferguson-has-been-wrong-on-economics-2012-8" target="_hplink">Conservative commentators</a> have been warning for years that investors will run away from Treasury bonds because of the national debt. So far it's not happening. <a href="http://www.huffingtonpost.com/2012/05/30/treasury-yield-record-low_n_1555975.html" target="_hplink">Interest rates on Treasury bonds</a> continue to hover at historic lows.

  • Health Care Reform Reduces The Deficit

    <a href="http://www.huffingtonpost.com/2012/09/04/republican-platform-2012-factual-mistakes_n_1840795.html#slide=1461142" target="_hplink">Republicans have blasted the Affordable Care Act</a> as "budget-busting." But <a href="http://www.huffingtonpost.com/2012/09/04/republican-platform-2012-factual-mistakes_n_1840795.html#slide=1461142" target="_hplink">health care reform actually reduces the deficit</a>, according to the Congressional Budget Office.

  • The U.S. Is Borrowing Less From China

    <a href="http://krugman.blogs.nytimes.com/2012/08/30/fear-of-china-syndrome/" target="_hplink">The U.S. government is borrowing much less from foreign countries</a> than before the recession, according to government data cited by Paul Krugman. That is because the U.S. private sector is financing our bigger deficits.

  • We Spend A Lot On Defense

    <a href="http://www.cbpp.org/cms/index.cfm?fa=view&id=1258" target="_hplink">Defense spending constituted 20 percent</a> of federal spending last year, or $718 billion, according to the Center on Budget and Policy Priorities. This adds up to <a href="https://twitter.com/AJInsight/statuses/241269134996959234" target="_hplink">41 percent of the world's defense spending</a>, according to Bloomberg TV anchor Adam Johnson. <a href="http://www.huffingtonpost.com/2012/07/19/mitt-romney-military-budget_n_1687601.html" target="_hplink">Mitt Romney has vowed</a> to not cut defense spending if elected president.

  • We Spend A Lot On Health Care

    <a href="http://www.cbpp.org/cms/index.cfm?fa=view&id=1258" target="_hplink">Health insurance, including Medicare and Medicaid, constituted 21 percent</a> of federal spending last year. In contrast, education constituted 2 percent of federal spending. Meanwhile, <a href="http://www.miamiherald.com/2012/08/19/2956609/middle-aged-blues-over-paul-ryans.html" target="_hplink">Mitt Romney and Paul Ryan have promised not to change Medicare</a> for Americans age 55 and older.

  • Republicans May Want Large Deficits For Now

    <a href="http://www.businessinsider.com/corporate-taxes-deficits-and-labor-vs-capital-during-reagans-first-term-2012-7" target="_hplink">The federal budget deficit ballooned</a> under Ronald Reagan, and that may be just the way Republicans like it. <a href="http://www.forbes.com/2010/05/06/tax-cuts-republicans-starve-the-beast-columnists-bruce-bartlett.html" target="_hplink">Some Republican thinkers</a> have proposed <a href="http://www.nytimes.com/2010/02/22/opinion/22krugman.html" target="_hplink">"starving the beast"</a>: that is, cutting taxes in order to use larger deficits to justify spending cuts later. Since Republicans ultimately want lower taxes and a smaller government, what better way is there to cut spending than to make it look urgent and necessary?