US budget deficit to hit $1.4 trillion in 2009

US budget deficit to hit $1.4 trillion in 2009

Washington: The US budget deficit is expected to hit a record $1.4 trillion in 2009, some $950 billion greater than the shortfall recorded last year, the Congressional Budget Office said Wednesday.

Congress’s non-partisan financial watchdog said the forecast federal deficit for the fiscal year that ended in September was the highest shortfall — relative to the size of the economy — since 1945.

The deficit resulted from both declining revenues and increased spending, stemming mostly from aid to the financial system and fiscal stimulus to jolt the world’s largest economy from a prolonged recession, the CBO said.

Revenues in 2009 were almost $420 billion or 17% below receipts chalked up last year, the lowest level in over 50 years, it said.

At the same time, outlays increased by over $530 billion or 18% in 2009 to the highest level also in over half a century.

The federal deficit in 2008 was $459 billion.

The deficit estimates were based on data from daily statements from the US Treasury and CBO projections.

Treasury officials said they would report the actual deficit in the middle of this month.

The White House projected in August that the 2009 fiscal budget deficit would reach $1.58 trillion.

It also estimated a whopping $9.05 trillion deficit for the 2010-2019 period, a $2 trillion increase from the February estimate made a month after President Barack Obama entered office and inherited a gaping deficit from his predecessor, George W. Bush.

The CBO said the federal government recorded a deficit of $31 billion in September, compared with a surplus of $42 billion in the same month last year.

“Quarterly payments of estimated individual income taxes and corporate income taxes typically result in a surplus for September; however, lower revenues and increased spending resulted in the 12th consecutive month of budget deficits," it said.