Monday, July 28, 2008

U.S. projects record budget deficit for 2009

AP reports a budget deficit for 2009 approaching $490 billion. That is the largest deficit on record after the U.S. government inherited a record budget surplus in 2000. Bill Gross in his July IO projected an all time budget deficit record of $1 trillion for the next government.

From the AP:
In fact, the White House had included cost estimates for an economic stimulus bill in its earlier projections, so the new figures represent a considerable deterioration in the government's fiscal health.

The White House had predicted in February that next year's deficit at $407 billion, which means the increase in the projections since then would approach $80 billion or so. Figures for the 2008 budget year ending Sept. 30 may also set a record.

The numbers represent about 3 percent of the size of the economy, which is the deficit measure seen as most relevant by economists. That's considerably smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.

Still, the new figures are so eye-popping in dollar terms that it may restrain the appetite of the next president to add to it with expensive spending programs or new tax cuts. In fact, pressure may build to allow some tax cuts enacted in 2001 and 2003 to expire as scheduled at the end of 2010, with Congress also feeling pressure to curb spending growth.

The deficit for 2007 totaled $161.5 billion, which represented the lowest amount of red ink since an imbalance of $159 billion in 2002. The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.

source: Bush administration projects record 2009 deficit
AP, Monday July 28,

read also: Bill Gross sends letter to the future President
Tuesday, July 1, 2008

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