MercoPress. South Atlantic News Agency

Congress estimates US budget deficit of 400 billion

The United States budget deficit is expected to reach 400 billion US dollars in 2008, according to estimates from the Congressional Budget Office.

The figure for the twelve months to September 30 is larger than a previous estimate by the White House of 389 billion US dollars. Factors behind the deficit increase include the cost of the war in Iraq and problems in the housing market that prompted a wider economic slowdown. The largest US deficit to date was 412.7 billion in 2004. The largest factor contributing to an increase in outlays "was the 15 billion disbursed in July this year by the Federal Deposit Insurance Corporation to cover deposits at failed financial institutions," said the CBO. Defence spending also saw "strong growth" in the ten months to July. The White House recently estimated that the deficit in 2009 would be 445 billion. Another factor contributing to the wider deficit is an increase in federal spending in a bid to boost the economy. The government set out plans for an economic stimulus package at the start of the year, involving about 145 billion in tax cuts to encourage spending. According to CBO estimates the federal budget deficit was about 371 billion for the first 10 months of fiscal year 2008, which is 213 billion more than the shortfall recorded over the same period in 2007. Revenues were about 1% lower than in the same period last year, whereas outlays have grown by almost 9%. CBO estimates that the federal government will end fiscal year 2008 with a deficit in the vicinity of 400 billion, close to the amount the agency projected last March after accounting for proposed supplemental appropriations.