U.S. federal deficit hits record high of $1.4 trln

14:12, October 17, 2009      

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The U.S. federal deficit of the 2009 fiscal year reached a record high of 1.42 trillion U.S. dollars, the Treasury Department announced Friday.

The U.S. government imbalance for the fiscal year ending Sept. 30, 2009, more than tripled last year's record. As a portion of the economy, the deficit accounted about 10 percent, the highest since World War II.

For fiscal year 2009, the government collected 2.1 trillion dollars in revenues, a 16.6 percent drop from 2008, while government spending jumped to 3.52 trillion dollars, up 18.2 percent over 2008.

The Treasury Department projected that the deficits would total 9.1 trillion dollars over the next decade unless corrective action is taken.

Treasury Secretary Tim Geithner pointed to the skyrocketing federal debt as a result of the government's actions to tackle the worst economic recession since the Great Depression of the 1930s.

The Obama Administration launched a 787-billion-dollar stimulus bill to boost the economy and another 700 billion dollars to stabilize the financial system since the president took office at the beginning of the year.

Besides, Geithner said, the debt was also a heritage of the George W. Bush period.

The 2009 deficit was largely the product of the spending and tax policies inherited from the previous Administration, according to the department.

"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," Geithner said.

"It was critical that we acted to bring the economy back from the brink earlier this year," White House budget director Peter Orszag said in a statement. "The president recognizes that we need to put the nation back on a fiscally sustainable path."

President Barack Obama has vowed to reduce the deficit once the economy returns to growth and the unemployment rate starts falling.

But critics said the government lacks of the political will to take necessary steps to balance its budget, such as raise taxes and cut spending.

The U.S. federal deficit is unsustainable if the government does not impose fiscal discipline, observed William Gale, senior fellow of the Washington think tank Brookings Institute.

Other economists believe that the debt and unemployment are key problems that will test the future of the Obama administration.

Source: Xinhua
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