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Federal deficit at record high

WASHINGTON — The federal budget deficit soared to a record $1.4 trillion in the fiscal year that ended in September, a chasm of red ink unequaled in the postwar era that threatens to complicate the most ambitious goals of the Obama administration, including plans for fresh spending to create jobs and spur economic recovery.

Still, the figure represents a significant improvement over the darkest deficit projections, which had been as much as $400 billion higher earlier this year, when the economy was wallowing in recession.

At about 10 percent of the overall economy, the gap between federal spending and tax collections in fiscal 2009 is the largest on record since the end of World War II, and bigger in nominal terms than the past four years of deficits combined. Next year is unlikely to be much better, budget analysts say. And President Barack Obama's current policies would drive the budget gap into the trillion-dollar range for much of the next decade.

As they unveiled the final 2009 figure on Friday, administration officials argued that expensive emergency programs — such as the $700 billion bank bailout requested by the Bush administration and the $787 billion economic stimulus package Obama signed during his first days in office — were essential to halting a frightening economic slide.

"This year's deficit is lower than we had projected earlier this year, in part because we are managing to repair the financial system at a lower cost to taxpayers," Treasury Secretary Timothy 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."

The report comes as lawmakers contemplate proposals that would drive spending even higher. Congress is enmeshed in a deeply partisan battle over Obama's plan to overhaul the nation's health care system, which would add billions of dollars to the federal budget, if not future deficits. Democrats also are considering extending safety-net programs for the unemployed, funding new job-creation strategies to combat a 9.8 percent unemployment rate and cutting seniors another round of $250 checks to make up for the government's decision to withhold cost-of-living increases for Social Security recipients.

With midterm elections approaching in 2010, Republicans are hoping to capitalize on the bleak budget picture. "Congress and the administration have made a bad situation much worse with an unrelenting spending binge," said Rep. Paul Ryan, R-Wis., the senior Republican on the House Budget Committee.

$459 billion

The deficit in fiscal 2008

$3.5 trillion

Government outlays in fiscal 2009, an 18 percent increase

over fiscal 2008

$190 billion

Interest paid over the past 12 months on treasury securities sold to finance the federal debt

$46.6 billion

Deficit in September,

the 12th straight month

of budget shortfalls

Federal deficit at record high 10/16/09 [Last modified: Friday, October 16, 2009 10:55pm]
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