WASHINGTON: The US government closed its 2009 fiscal year with a record $1.417 trillion budget deficit as it poured resources to contain a serious financial crisis that plunged the nation into recession.
The deficit was some $962 billion higher than the prior year and amounted to 10 percent of US gross domestic product (GDP), the highest since 1945, officials said Friday.
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 following the worst financial crisis in decades.
Receipts for the fiscal year that ended in September totaled $2.105 trillion while outlays were $3.522 trillion, the Treasury said.
Officials, however, pointed out that the deficit was $162 billion lower than the $1.580 trillion forecast by the administration of President Barack Obama, who inherited the flood of 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 “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 that resulted 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.
