Federal Deficit Hits Record $1.42 Trillion

U.S. Budget Deficit Now Stands at 10% of the Economy - Highest Since World War II

(AP)  The federal budget deficit has surged to an all-time high of $1.42 trillion as the recession caused tax revenues to plunge while the government was spending massive amounts to stabilize the U.S. financial system and jump-start the economy.

The imbalance for the budget year ended Sept. 30, more than tripled last year's record. The Obama administration projects deficits will total $9.1 trillion over the next decade unless corrective action is taken.

As a portion of the economy, the budget deficit stood at 10 percent, the highest since World War II, according to government data released Friday.

President Barack Obama has pledged to reduce the deficit once the Great Recession ends and the unemployment rate starts falling. But economists worry the government lacks the will to make the hard political choices to cut spending and raise taxes to get control of the imbalances.

For 2009, the government collected $2.10 trillion in revenues, a 16.6 percent drop from 2008. The plunge reflected declining income tax collections as millions of Americans lost their jobs or saw their wages cut. Corporate taxes also plummeted as the recession squeezed companies' profit margins.

Government spending last year jumped to $3.52 trillion, up 18.2 percent over 2008. The $700 billion financial bailout fund and increased spending and tax relief from the $787 billion economic stimulus program that Obama pushed through Congress in February drove the increase.

For September, a month when the government usually records surpluses, the deficit totaled $46.6 billion. That's a sharp contrast to the $45.7 billion surplus in September 2008, the last time the government's books were in the black.

In issuing the final budget figures, top administration officials said the president was determined to get control of the deficits in coming years.

"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."

Failure to curb runaway deficits could trigger a financial train wreck that would push interest rates and inflation higher, and send the dollar crashing if foreigners suddenly started dumping their holdings of Treasury securities.

None of those problems are evident now as the worst recession since the 1930s has depressed borrowing by consumers and businesses, giving the government a break on the interest it paid this year on the record debt. Net interest payments actually fell by about $10 billion in 2009 from 2008.

But economists worry investors will grow fearful of the nation's ability to repay all the debt unless the administration and Congress begin developing credible plans to deal with the deficit problem once the recession has ended and unemployment has begun to come down.

[pensacola8-2009]

The Federal Financial Picture will look healthier when the US Dollar gets strong again. Many forgot that from 2001-2007 the US dollar weakened so badly that the cost of buying Euros almost doubled in those six years.

The recent reversal on the foriegn exchange markets signifies that confidence is coming back, but since it required 6 years to fall, it may easily require 6 more years to recover. There will be many iterations of financial markets shifting money between the USA and foriegn markets as other countries are required to control their trade deficits and keep their economies solvent without operating on borrowed income, as the USA has done for 38 years.

[mjvwsr]

the dollar can't get stronger with this debt

[bzzpd]

I would like it if CBS actually did a story on what we actually owe on the governments debt. Especially the debt they hide off of the books.

[bzzpd]

(www.usdebtclock.org) We owe 131 Trillion dollars on the US Debt.

National Debt 11.927 Trillion....Bank Bailouts 11.531 Trillion....Social Security 14.729 Trillion....Prescription Drug Liability 18.603 Trillion....Medicare Liability 74.037 Trillion dollars...........................................................
$131,000,000,000,000.00 Trillion dollars divided by 153,000,000 million people actually working in the United States equals???
$855,000.00 thousand dollars for each working american citizen. Most of these citizens will be lucky to make one million dollars in their lifetimes.
We have 78 million baby boomers ready to retire in the next 15 years.

The United States is bankrupt. This debt will lead to hyperinflation.
They will knock two zero's off of the One Hundred Dollar bill.
Benjamin Franklin will be the new one dollar bill.

Look at the website and use your calculator yourself. (www.usdebtclock.org) Spread the news and the website to your friends.
The United States Government is full of liars playing ponzi schemes upon us all.

[winslowe1]

Precisely what the majority of voters voted for.

[payasyougo]

There is absolutely no argument that President Bush and his congress left a pile of dog doo doo for the next administration. I'll give you that.

But the next administration has spread that doo doo all over the house. There was no attempt to clean it up. Now that the mess is everywhere.

This administration, in concert with the outgoing administration turned a four state housing bubble into a nationwide recession.

- The bailout funds have been for the benefit of government.
- The people that caused this mess are not only not in jail they are getting billions in bonuses.
- And Barney Frank still denies accountability. What regulation has changed to prevent another occurrence Mr. Frank? It has been a year. What is Frank's job description?

This whole thing still stinks.

[culturechang]

This is no surprise. The federal govt is enormous with tremendous power and expenses.

[dprice123-2009]

U.S. Budget Deficit Now Stands at 10% of the Economy - Highest Since World War II.......The only difference is that we are not going to have the same prosperity that we had between 1945 and 1970.

[dprice123-2009]

U.S. Budget Deficit Now Stands at 10% of the Economy - Highest Since World War II.......The only difference is that we are not going to have the same prosperity that we had between 1945 and 1970.

[sjc_1]

But Cheney told Bush that Reagan proved "deficits don't matter".

[mav547166]

And it seems that Obama listened.

[nextgenman09]

And it seems that Bush listened and left the mess to Obama.

[sjc_1]

Presidents proposed the budgets and sign the budgets. All the Reagan years the Congress had to change the budget proposals to make them more balanced. Yes, what the President does matters in very big ways.

[mjvwsr]

typical late friday release

[erichsh]

And buried by the media. You'll also note that it's "President Barack Obama has pledged to reduce the deficit, but it's "the government" that lacks the will to do it.