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Budget deficit hit record in March

WASHINGTON — The Treasury Department said Friday that the budget deficit increased by $192.3 billion in March, and is near $1 trillion just halfway through the budget year, as costs of the financial bailout and recession mount.

Last month's deficit, a record for March, was significantly higher than the $150 billion that economists expected.

The deficit already totals $956.8 billion for the first six months of the budget year, also a record for that period. The Obama administration projects the deficit for the year will hit $1.75 trillion.

A deficit at that level would nearly quadruple the previous annual record of $454.8 billion set last year. The March deficit was nearly four times the size of the imbalance in the same month last year.

The Treasury report said that through the end of March, $293.4 billion had been provided to support companies through the $700 billion bailout fund Congress passed in October. That support has been provided primarily to banks, although insurance giant American International Group Inc. and auto companies General Motors Corp. and Chrysler LLC also have received assistance.

Besides the bailout fund, Fannie Mae and Freddie Mac received $46 billion last month, bringing the total assistance provided to the mortgage finance companies to $59.8 billion since October.

The government took control of both in September after they suffered billions of dollars in losses on mortgage loans.

Through the first six months of the budget year that began Oct. 1, tax revenue has totaled $989.8 billion, down 13.6 percent from the year-ago period.

The Treasury report showed benefit payments from the unemployment trust fund totaled $44.6 billion so far this budget year, up from $19.4 billion last year.

The Congressional Budget Office estimated last month that President Barack Obama's budget proposals would produce $9.3 trillion in deficits over the next decade, a figure $2.3 trillion higher than estimates made in February in the administration's first budget proposal.

Some economists have expressed concerns that the massive deficits being forecast could push interest rates up sharply.

Of particular concern are foreign investors worrying about the size of the U.S. deficit projections.

Budget deficit hit record in March 04/10/09 [Last modified: Friday, April 10, 2009 7:44pm]
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