Budget Deficit Hits Record $438 Billion

With Economic Slump, Revenues Dropped 2 Percent, Says Congressional Budget Office

(CBS/ AP)  The federal budget deficit hit a new record in the just-completed 2008 budget year under the latest estimates from the Congressional Budget Office.

The record $438 billion shortfall for the budget year that ended last week is up from $162 billion posted last year. The previous record of $413 billion was posted in 2004.

CBO said Tuesday that with the economy in a slump, revenues dropped by almost 2 percent. Corporate income receipts dropped by $65 billion, or nearly 18 percent. At the same time, individual income tax revenues declined by 1.6 percent.

The deficit is virtually certain to balloon even higher next year as the government sorts out the financial crisis and taps a $700 billion Treasury fund to buy toxic mortgage-related securities.

The next president is likely to have to scale back campaign pledges as he inherits a likely deficit for 2009 exceeding $500 billion. That was one of the points raised in Tuesday's presidential debate. Previous to that, neither GOP standard-bearer John McCain nor Democratic nominee Barack has given much detail regarding what promises they won't be able to keep.

The latest figures for 2008 are somewhat of a surprise, registering more than $30 billion more than CBO's update issued just last month and almost $50 billion higher than what the White House predicted in July.

The numbers also amplify President Bush's poor record on the deficit. Virtually every administration promise on the deficit has failed to come to pass.

Bush inherited a budget seen as producing endless huge surpluses after four straight years in positive territory. That stretch of surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest expansion in U.S. history.

Those predictions were based on faulty models. Also, a recession in March 2001 and government spending to fight the war on terrorism helped push the deficit to its previous record in 2004.

Major rounds of tax cuts enacted in 2001 and 2003 have also contributed to the deficit and renewing them - and their $200 billion-plus annual cost - when they expire at the end of 2010 would make it extremely difficult to balance the budget anytime soon.

A later promise to cut the deficit in half by the time Bush leaves office is in tatters, and virtually no one takes seriously his proposed path to a balanced budget by 2012.

The deficit numbers for 2008 represent about 3 percent of the size of the economy, which is the measure economists consider the most relevant. By that measure, the deficit is smaller than the deficits of the 1980s and early 1990s that led Congress and earlier administrations to cobble together politically painful deficit-reduction packages.

"Our children and grandchildren will be paying the price for years to come as they shoulder this growing burden of debt," said House Budget Committee Chairman John Spratt Jr., D-S.C.

The Treasury Department is expected to release the official deficit tally by midmonth.

[babooph]

Wow & not much middle class to work & pay all that PLUS THE INTEREST !!The rich must be setting up overseas fast-they will never be dumb enough to pick up any of that tab!!

[ramos937]

Deficit will exceed $500 Billion.....sorry folks, $500 billion is no even close. The true number is estimated to be about $1500 billion. Why? The government uses a cash basis of accounting and not the accural method of accounting. Don''t know what that means? Ask a CPA or bookkeeper but be seating down when you do.

[ubrew12]

"Budget Deficit Hits Record $438 Billion"

This is the thing. We are in a global credit crisis: lenders won''t lend to borrowers cuz they don''t think they will get paid back. It affects everyone since every bank is lending everyday to every other bank. But there is always a ''lender'' of last resort: government. Governments are supposed to step in when things go wack with capitalism, they''ve done it for 100 years. And the U.S. governments $10 trillion Reagan/Bush debt now makes it difficult for the worlds largest capitalist economy to take that important step, which is WHY this credit crisis threatens to blow up in our face, turning what should be a mild recession into a full-blown depression.

[phldml]

How can he sit in the Oval office knowing that this is his fault for not having the U.S. Government keep a watchful eye on this. This didn''t happen overnight. What a disgrace. He an chainey should go hunting !!!

[jsl45]

George Bush, the Herbert Hoover of the 21st Century....what a disaster!!!

[wdrussell1]

Reagan-fiscal conservative-200+billion dollar defecit.
Bush Sr-fiscal conservative-300 billion dollar defecit.
Clinton-tax/spend liberal-200 billion dollar surplus.
Bush Jr-fiscal conservative-400 billion dollar defecit.
McCain-fiscal conservative-Good reason to vote for Sen.Obama.

[petro49l]

George W. Bush is an inept fool. His eight years in office were corrupt, pompous, and wasteful. OPEC virtually runs the Administration to drive the cost for a barrel of oil. The next President should reject the Saudis. There is no reason to pay so much for gasoline. Why fight wars against Arab Peasants?

[terrapin78]

Thanks Bu$h!

McSame=Bu$h!

[whitemale08]

Ever since we went off the gold standard we''ve been exporting bundles of worthless paper Federal Reserve Notes while the rest of the world has been sending us real commodities like oil and manufacturing products.

This is all coming to an end. Countries around the world are saying NO, NO to the "PAPER BOYS" of Wall Street and City of London.

We can either let these parasites and ticks go out of business for good or try to bail them out while we enter a New Dark Age.

[grandesign]

Did anyone hear, CBS hasn''t posted the news yet. A Fed interest rate cut of 0.5% today, along with Europe''s banks.

Gonna add more liquidity, to the market.

[jackp32]

Comment overheard from a mortgage deadbeat: Where is my bailout check and new credit cards?

[babooph]

The British destroyed themselves in two wars-AND THEY WON!!Their people NEVER recovered from the stupidity-Chamberlain knew they would not fight inww2 for the rotten corpse of the idle rich [Singapore& Dunkirk proved him right]-the Soviets & USA had to save the wastelings.

[slim1h2o]

No I''m not French...


Um, that sould be pulled, not puuled,,sorry

[slim1h2o]

Budget Deficit Hits Record $438 Billion

Only??

How is the bailout money NOT figured into this equation?


They must have puuled the bailout money out of thin air, apparently.