U.S. budget deficit doubles, hits highest mark in history

October 15, 2008|By Richard Simon | Richard Simon,Los Angeles Times

WASHINGTON -

Compounding terrible economic news, budget officials announced yesterday that the federal deficit has soared to a record $455 billion, injecting new urgency into the closing days of the presidential campaign about federal spending, including efforts to stem the financial crisis.

The final accounting for fiscal 2008 produced a larger shortfall than had been projected, reflecting the start of federal efforts to address the economic emergency. It is certain to become a significant campaign issue, confronting presidential candidates with new questions about their growing slate of proposals for new spending and tax cuts at a time when red ink is surging.

"The reality is that the next president will be inheriting a fiscal and economic mess of historic proportions - the legacy of President Bush's failed policies," said Sen. Kent Conrad, a Democrat from North Dakota, and chairman of the Senate Budget Committee. "It will take years to dig our way out."

The deficit figures to be even bigger next year as the country copes with the worst financial crisis since the Great Depression.

The new figure breaks the previous record of a $413 billion deficit in 2004 and more than doubles the 2007 deficit, $162 billion. It has focused new attention on government spending, coming just days after the National Debt Clock in New York ran out of digits to record the overall national debt, which passed $10 trillion.

In Congress, the record deficit figures to intensify debate over Democrats' efforts to pass another economic stimulus package, perhaps worth $150 billion, and over the issue of fiscal discipline.

Administration officials blamed the deficit in a large part on the nation's economic troubles, which produced lower than expected tax revenues and led to passage of an economic stimulus package that included tax rebates.

The figures were released as the Treasury Department detailed its plans to inject $250 billion into banks, part of a $700 billion financial rescue plan recently approved by Congress. As part of the bailout, Congress lifted the ceiling on the national debt to $11.3 trillion from $10.6 trillion.

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