Friday October 16, 09:07 PM
US budget deficit hits record $1.4 trillion: govt
WASHINGTON (AFP) - The US government closed its 2009 fiscal year with a record budget deficit of 1.417 trillion dollars, some 962 billion dollars higher than the prior year, officials said Friday.
The deficit amounted to 10 percent of US gross domestic product (GDP), the highest since 1945.
The huge jump in the budget shortfall stemmed from both declining revenues and a massive ramping up of spending in a fiscal stimulus to jolt the world's largest economy from a prolonged recession.
Receipts for the fiscal year that ended in September totalled 2.105 trillion dollars while outlays were 3.522 trillion dollars, the Treasury said.
The officials however pointed out that the deficit was 162 billion dollars lower than the 1.580 trillion dollars projected by the administration of President Barack Obama, who inherited the red ink from his predecessor George W. Bush.
"The financial year 2009 deficit was largely the product of the spending and tax policies inherited from the previous administration, exacerbated by a severe recession and financial crisis that were underway as the current administration took office," Treasury Secretary Timothy Geithner and White House budget chief Peter Orszag said in a joint statement.
The deficit was lower than projected by the Obama administration earlier this year "in part because we are managing to repair the financial system at a lower cost to taxpayers," Geithner said.
"But future deficits are too high, and the president is committed to working with Congress to bring them down to a sustainable level as the economy recovers," he said.
Orszag said "it was critical that we acted to bring the economy back from the brink earlier this year," referring to the financial crisis resulting from a housing market meltdown.
The crisis plunged the country into recession in December 2007 and led to the collapse of financial and investment houses and a massive government bailout of some of the institutions.
"As we move from rescue to recovery, the President recognizes that we need to put the nation back on a fiscally sustainable path," Orszag said.
As part of the fiscal year 2011 budget policy process, he said the Obama administration was considering proposals to put the country "back on firm fiscal footing."
Obama's Republican critics have stepped up their calls for the president to abandon his key reform plans to remake US health care and combat climate change that some estimate could cost several trillions of dollars.
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