Federal Budget Deficit At Record $454 Billion
Wednesday, October 15, 2008
The federal budget deficit soared to $454.8 billion in 2008 as a housing collapse and efforts to combat the economic slowdown pushed the tide of government red ink to the highest level in history.
The Bush administration said yesterday that the deficit for the budget year ended Sept. 30 was almost triple the $161.5 billion recorded in fiscal 2007.
It surpassed the previous yearly record of $413 billion set in 2004. Economists predicted a far worse number next year as the costs of the financial system rescue and the economic hard times hit the nation's balance sheet.
Some analysts said next year's deficit could easily top $700 billion, giving the next president a formidable challenge.
The administration blamed this year's record deficit on a litany of economic woes. The housing slump sharply reduced economic growth and sent the unemployment rate rising, developments that reduce tax revenue.
"This year's budget results reflect the ongoing housing correction and the manifestation of that in strained capital markets and slower growth," Treasury Secretary Henry M. Paulson Jr. said in a statement.
Democrats said the administration's economic policies were responsible for the growing deficit. They noted that when Bush took office in 2001, the budget was in surplus with projections that total surpluses over the next decade would reach $5.6 trillion.
Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the national debt had climbed by more than $1 trillion since Bush has been in office and "the next president will inheriting a fiscal and economic mess of historic proportions."
The Bush administration is projecting that the deficit in the current budget year will rise to $482 billion, but that estimate does not include the costs of the financial rescue program passed by Congress on Oct. 3.
The deficit for 2008 reflected the costs for a $168 billion economic stimulus program that Congress passed at the beginning of this year.