Federal budget deficit highest since 1945 - CBO
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PrintThe Congressional Budget Office (CBO) estimates that the federal budget deficit was equal to 9.9 percent of gross domestic product (GDP) in fiscal year 2009. That is up from 3.2 percent in 2008. This is the highest government budget deficit, relative to the size of the economy, since 1945.
Increase in budget deficit
This massive increase in the deficit resulted from a reduction in revenues of $420 billion and an increase in spending of more than $530 billion.
The revenues for 2009 totaled about 15 percent of GDP. This is the lowest level for revenues in over 50 years. At the same time, outlays in 2009 of nearly 25 percent of GDP is the highest level in over 50 years.
These estimates are based on data from the Daily Treasury Statements and CBO’s projections.
"While it is imperative that we avoid undercutting ongoing efforts to spur a recovery from what is in many respects the worst recession since the 1930s, it is vital that policymakers begin as soon as possible to take the steps needed to raise revenues and slow spending growth when the economy recovers in order to put the budget on a sustainable path," says the Center on Budget and Policy Priorities, a non-profit think tank, about the government's long-term fiscal deficit and debt projections.
Federal budget deficit in 2009 compared to 2008
CBO estimates that the federal budget deficit was about $1.4 trillion in 2009, $950 billion greater than the shortfall recorded in 2008.
Federal Government Revenues through September ($ billions) |
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| Source | Actual FY2008 |
Preliminary FY2009 |
Percentage Change |
||||
| Individual Income Tax | 1,146 | 916 | -20.1 | ||||
| Corporate Income Tax | 304 | 139 | -54.4 | ||||
| Social Insurance Tax | 900 | 891 | -1.0 | ||||
| Other | 174 | 160 | -8.0 | ||||
| Total | 2,524 | 2,106 | -16.6 | ||||
| Sources: Department of the Treasury, OMB, and CBO. | |||||||
Federal Government Spending through September ($ billions) |
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| Major Category | Actual FY2008 |
Preliminary FY2009 |
Percentage Change |
||||||
| Defense—Military | 595 | 636 | 7.0 | ||||||
| Social Security Benefits | 607 | 659 | 8.6 | ||||||
| Medicare *(a) | 390 | 428 | 9.8 | ||||||
| Medicaid | 201 | 251 | 24.7 | ||||||
| Unemployment Benefits | 47 | 120 | 155.9 | ||||||
| Other Activities | 883 | 975 | 10.4 | ||||||
| Subtotal | 2,723 | 3,070 | 12.7 | ||||||
| Net Interest on the Public Debt | 260 | 199 | -23.2 | ||||||
| TARP | 0 | 154 | n.a. | ||||||
| Payments to GSEs | 0 | 91 | n.a. | ||||||
| Total | 2,983 | 3,515 | 17.8 | ||||||
| Sources: Department of the Treasury, OMB, and CBO. | |||||||||
| Note: TARP = Troubled Asset Relief Program; GSE = government-sponsored enterprise; n.a. = not applicable. | |||||||||
| a. Medicare outlays are net of proprietary receipts. | |||||||||
