MercoPress. South Atlantic News Agency

Bush legacy: record deficit surprises for next US president

The next United States president is expected to face a record federal budget deficit of almost half a trillion dollars. The White House is tipped to lift its deficit forecast for 2009 to 490 billion from 407 billion US dollars.

The budget deficit measures how much more the government is spending than it is rising through taxes. The slowing economy is reducing the tax take and the government has launched a stimulus plan by making payments to 130 million households to boost spending. The White House is expected to officially revise its deficit prediction later on the day. The forecast figure will underestimate the deficit the current administration excludes about 80 billion of war costs from its predictions. The budget deficit is measured from the beginning of October to the end of September. It is possible that the deficit for 2008 will also break the record of 413 billion, which was set in 2004. A 490 billion deficit would represent about 3% of the total output of the US economy, GDP, which is well below some of the deficits seen in the 1980s and 1990s in percentage terms. Nonetheless whoever turns out to be the next US president may be reluctant to enact any further tax cuts or increases in spending that would raise the deficit. The deficit figure also is flattered by including the surpluses that are currently being accumulated by the social security trust fund, but that will soon turn into deficits in the next decade. And it takes no account of the potential costs of a full-scale Federal bail-out of the mortgage giants Fannie Mae and Freddie Mac, who have been given a Federal guarantee in the housing bill that has just passed Congress.