U.S. deficit hit $1.4 trillion in '09

WASHINGTON (MCT) — The U.S. government ran a deficit of $1.4 trillion in fiscal 2009, the Treasury and the White House said Friday, smaller than predicted in August but more than triple the $455 billion shortfall recorded in 2008.

The Obama administration's efforts to rescue U.S. banks and its stimulus package made up nearly a quarter of the total deficit for 2009, said Treasury Secretary Timothy Geithner and White House Office of Management and Budget Director Peter Orszag in a joint statement.

"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," said Geithner.

In August, the Office of Management and Budget estimated that the fiscal 2009 deficit would be $1.58 trillion, down from its previous estimate of $1.84 trillion.

Orszag said President Barack Obama recognizes "we need to put the nation back on a fiscally sustainable path" and that the administration is weighing policies to do that as part of the fiscal 2011 budget process.

The numbers come as Obama and Democrats in Congress are trying to approve an overhaul of the U.S. health care system, without adding to the deficit. A recent analysis of one of the major reform bills said the measure would save $81 billion over 10 years.

In September, the government posted a deficit of $46.6 billion, marking the 12th straight month of budget shortfalls. A year ago in September, the federal government recorded a surplus of $46 billion.

Outlays grew by 18 percent in fiscal 2009, to $3.5 trillion, as the Obama administration grappled with the financial crisis. In 2008, outlays were $2.9 trillion. The extra spending came primarily from the troubled asset relief program, the government's stock purchase agreement with mortgage-finance giants Fannie Mae and Freddie Mac and the economic stimulus act signed by Obama in February.

The year-end deficit figure was in line with congressional estimates. Earlier this month, the Congressional Budget Office estimated that the deficit was about $1.4 trillion in fiscal 2009, $950 billion more than the shortfall posted in 2008.

The $1.42 trillion is more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the United States.

As a percentage of U.S. economic output, it's the biggest deficit since World War II.