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Published October 9, 2009

US 2009 deficit totals US$1.4t: Budget Office

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(WASHINGTON) The US government ended its 2009 fiscal year with a deficit of US$1.4 trillion, the biggest since 1945, the Congressional Budget Office (CBO) reported.

The deficit amounted to 9.9 per cent of the nation's economy, triple the size of the shortfall for 2008.
The non-partisan CBO said on Wednesday that the government was squeezed on both sides of the budget ledger in the fiscal year that ended Sept 30. Tax revenue fell by US$420 billion, or 17 per cent, to the lowest level in more than 50 years.
Individual income taxes, the biggest source of tax receipts, fell by 20 per cent, the agency said. Corporate income taxes dropped by 54 per cent, reflecting the slow economy.
At the same time, federal spending rose by 18 per cent, the CBO said. About half of the spending increase, US$245 billion, was driven by the costs of bailing out the financial industry and taking over mortgage financiers Fannie Mae and Freddie Mac.
The spending increases and tax cuts included in the economic stimulus package approved in February added almost US$200 billion to the 2009 deficit, the CBO said.
Obama administration officials and Democratic leaders in Congress have expressed reluctance about pushing for a second stimulus package.



Still, with unemployment on the rise and likely to reach 10 per cent by the end of the year, President Barack Obama and his advisers are considering a mix of spending programmes and tax cuts aimed at boosting the economy.
Mr Obama met at the White House on Wednesday with Senate majority leader Harry Reid, a Nevada Democrat, and House Speaker Nancy Pelosi, a California Democrat, to discuss the proposals.
Steps under consideration include extending unemployment insurance benefits and an US$8,000 tax credit to help first-time home buyers that is due to expire later this year.
'We have been working with Congress for quite some time on this,' White House press secretary Robert Gibbs said on Oct 6.
'I think there's bipartisan agreement to extend the safety net to ensure that those that have fallen on hard times and have lost their job have the benefits they need to provide for their families.'
The CBO's deficit estimate is based on US Treasury data and its own estimates. The Treasury Department will report the actual 2009 deficit later this month. -- Bloomberg