MercoPress. South Atlantic News Agency

All time US budget deficit record in 2009, equivalent to 9.9% of GDP

CBO says spending in fiscal 2009 was equivalent to 25% of GDP

The US budget deficit more than tripled to a record 1.4 trillion US dollars in the fiscal year to 30 September, according to US Congress estimates. Congressional analysts had previously predicted a deficit of 1.6 trillion but revised their latest estimate, which comes after the end of the fiscal year.

The huge deficit was put down to increased government spending and a big drop in tax revenues. The Treasury Department will report the actual deficit later this month.

The Congressional Budget Office (CBO) said the deficit was equal to 9.9% of gross domestic product (GDP). This is the largest deficit relative to GDP since 1945.

The previous record deficit was 459 billion, in fiscal year 2008.

The CBO said the increased spending was due in large part to the government's Troubled Asset Relief Program, the 787 billion USD on economic stimulus and the rescue of mortgage giants Fannie Mae and Freddie Mac.

The fiscal 2009 spending is equal to 25% of GDP, which the CBO states is “the highest level in over 50 years”. The federal government also saw revenues drop to historic lows in fiscal 2009, falling by 419 billion USD, or 16.6%, from the previous year. The CBO cited falling revenues specifically from income tax withholding and corporate tax receipts, both of which were affected by the weakening economy.

For the month of September alone, the US ran an estimated budget deficit of 31 billion USD, in contrast to a 42 billion surplus the previous year.