House Representatives endorsed a tax-cutting package at the end of last year that significantly increased the current US budget deficit.
BBC: Congress delays US government shutdown over budget cuts
But Republicans are strongly opposed to increased government spending, amid a rancorous political divide over how to tame the US budget deficit.
Those cuts took effect after Democrats and Republicans failed to agree to another plan to cut spending and reduce the US budget deficit.
With little to hold onto so deep into the holiday season, investors remain warmed by potential progress in the US budget deficit talks.
It comes days after President Obama proposed a two-year pay freeze for federal government workers as part of efforts to reduce the US budget deficit.
Polling has indicated most Americans see a mix of tax increases on the wealthy accompanied by some spending cuts as the best way to trim the US budget deficit.
They noted the bill adds to the US budget deficit, while also objecting that the low tax rates - which have the biggest impact on the deficit - are only temporary.
The budget cuts, known in Washington DC as the sequester, were devised in 2011 as an intentionally painful cudgel to encourage Democrats and Republicans in Congress to strike a deal to reduce the US budget deficit.
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In buying such bonds these governments are, in effect, underwriting the large US Federal budget deficit as well.
'Prudence with a purpose' that left us with the biggest budget deficit in the G20, we remember that.
All three major credit rating agencies have threatened to reduce the US sovereign debt rating a notch to AA if the debt ceiling is not raised and if the US budget remains in deep deficit.
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"We had campaigned in saying what the Republican Congressional Budget Office told us: Nothing contributed more to the budget deficit than the tax cuts for the wealthiest people in America, " Pelosi said in an interview Sunday with Fox News.
"Council was asking us to approve a deficit budget - we are not willing to negotiate in this way, " Mr Schulz said.
And the budget deficit has led the US ratings agency, Standard and Poors, to put the currency on review for a possible downgrade.
Even more worrying, in the short term, is that alarming statistic I flagged up last week: the Office for Budget Responsibility expects us to run a current account deficit of 4% of GDP in 2012.
"We need to make sure that everybody participates in getting us to a budget that deals with our debt and our deficit responsibly, " Budget Committee Chairwoman Patty Murray, D-Wash.
However, one sector of the market that has welcomed the ballooning budget deficit is the commodity sector, as a weaker US dollar translates into higher commodity prices.
FORBES: Tax Compromise Helps Some Investors More than Others
China controls our economy because we owe them so much money: It must be made clear that US debt to China has nothing to do with the federal government budget deficit and everything to do with the trade deficit.
The cuts were created in negotiations over a 2011 bill that raised the US debt ceiling, the legal limit that America is allowed to borrow to fund its budget deficit.
Moderate Republican Senators reduced the tax cut - which Mr Bush believes is essential for reviving the US economy - but half, on the grounds that it would create too large a budget deficit.
The deficit hawks are right to worry that the president's budget may leave us in too deep a hole years from now.
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