US deficit to hit record high of 1.4 trillion dollars

REUTERS - The U.S. government spent a record $1.4 trillion more than it collected in the fiscal year ended Sept. 30, congressional analysts said on Wednesday, in their final estimate before the official numbers are issued.

Bank bailouts, stimulus spending and declining tax revenues due to a deep recession led the government to post a deficit that amounts to 9.9 percent of the U.S. Gross Domestic Product for the 2009 fiscal year, the Congressional Budget Office said.

The Treasury Department will report the actual deficit later this month. The deficit for fiscal 2008 was $459 billion.

The $1.4 trillion estimate is less than the budget office’s estimate of $1.58 trillion issued in August, but the discrepancy arises from differences in calculating the costs of bailing out mortgage giants Fannie Mae and Freddie Mac, not any sudden change in economic conditions, CBO said.

The government took in $2.1 trillion in fiscal 2009, a 16.6 percent drop from the previous year as the recession led to sharp declines in individual and corporate income taxes, CBO said.

On the other half of the ledger, outlays increased 17.8 percent to $3.5 trillion, CBO said.

Among the most expensive items were $154 billion for bailouts under the Troubled Asset Relief Program, $91 billion for the Fannie and Freddie bailouts, and $100 billion under the massive stimulus package approved in February.

Excluding items in the stimulus package, spending for unemployment benefits more than doubled to $120 billion, CBO said.

One bright spot: the government’s interest payments on its debt actually decreased 23 percent to $199 billion thanks to lower interest rates, CBO said.