Deficit was largest for November on record

WASHINGTON — The federal budget deficit rose to $150.4 billion last month, the largest November gap on record. And the government’s deficits are set to climb higher if Congress passes a tax-cut plan that is estimated to cost $855 billion over two years.

The Treasury Department said November’s budget gap was 25 percent more than the deficit in November 2009.

For the first two months of the current budget year, which began Oct. 1, the deficit totals $290.8 billion. That is 2 percent less than the same period a year ago.

Economists had estimated that the full-year deficit would decline after two years of record highs.

But analysts said the tax deal President Obama reached with Republicans this week will give the 2011 budget year the largest deficit in history — $1.5 trillion, according to economists at JPMorgan Chase.

It would mark the third straight year of trillion-dollar-plus deficits.

Under the tax-cut plan, JPMorgan economist Michael Feroli said, he expects a $1.5 trillion deficit to be followed by a $1.2 trillion gap in 2012.

Many economists had expected Congress to extend the tax cuts that were enacted in 2001 and 2003, and they had included those extensions in their deficit forecasts for coming years.

But they had not factored in other parts of the tax-cut plan, notably a 2 percentage-point cut in workers’ Social Security tax for next year. That will cost the government an additional $112 billion over the next year.