Federal Deficit Soars to a Record $1.417 Trillion

Obama officials blame deficit on the Bush administration.

ByABC News
October 16, 2009, 3:35 PM

Oct. 16, 2009 — -- The federal deficit soared to a record $1.42 trillion at the end of the 2009 fiscal year, the Obama administration announced today, blaming the shortfall on the Bush administration.

"The FY2009 deficit was largely the product of the spending and tax policies inherited from the previous administration, exacerbated by a severe recession and financial crisis that were underway as the current administration took office," the Treasury Department and Office of Management and Budget said in a statement.

The Obama administration stated that their economic rescue and recovery efforts accounted for only 24 percent of the total deficit.

This year's record deficit stems from increased government spending to beat back the recession and the financial crisis, as well as decreased revenue from tax receipts. For the fiscal year that ended Sept. 30, the government racked up overall receipts of $2.1 trillion, but outlays totaled $3.5 trillion. Federal borrowing from the public net of financial assets, the department said, rose by $1.417 trillion to $6.71 trillion, 47 percent of GDP.

The year-end deficit came in $162 billion under the Obama administration's most recent projection of $1.58 trillion. Originally, the administration had projected in February a deficit of $1.84 trillion, but reduced its projection in August to $1.58 trillion. The final deficit numbers released today were even lower than that, at $1.417 trillion, due to outlays $132 billion lower than anticipated in August because fewer funds from the Troubled Asset Relief Program were spent.

"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," Treasury Secretary Tim Geithner said in a statement. "But future deficits are too high, and the President is committed to working with Congress to bring them down to a sustainable level as the economy recovers."