US budget deficit: $1,400bn

US Budget Deficit

In their final estimate before the official numbers are released, the Congressional Budget Office (CBO) claim the US government has spent a record $1,400 billion more than it collected in the fiscal year ending September 30, compared to the $459 billion deficit for fiscal 2008.

Thanks to bank bail-outs, stimulus spending and declining tax revenues due to the worst recession since the Great Depression, the government has posted a deficit amounting to almost ten percent of the US GDP for the 2009 fiscal year.

The latest estimate is under that of August's, which congressional analysts posted as $1,580. This 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, the CBO said.

In fiscal 2009, the government collected $2,100 billion, a 16.6 percent drop from the previous year as the recession led to drastic falls in individual and corporate income taxes, and outlays increased 17.8 percent to $3,500 billion.

Bank bail-outs were the most expensive outlay for the US government, costing $154 billion under the troubled asset relief program. Other expensive items were the $91 billion for the Fannie and Freddie bail-outs, and the $100 billion forked out under the massive stimulus package approved in February.

Employment benefits were also driven up, doubling to $120 billion.

But on a brighter note for the economy, the government's interest payments on its debt actually decreased 23 percent to $199 billion thanks to lower interest rates.

We can only hope it was money well spent.

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