MW: U.S. deficit rises to $455 billion as economy sinks
Government borrows more than $1 trillion as crisis takes its toll on finances
WASHINGTON (MarketWatch) -- The U.S. federal government budget deficit widened to $455 billion in fiscal 2008 as the impact of a slower economy and the extraordinary federal response to the financial crisis took its toll on the public finances.
In nominal dollar terms, it was the largest deficit ever, but it was not a record as a proportion of the economy. The deficit widened from 1.2% of gross domestic product in 2007 to 3.2% in 2008, the largest deficit since 3.6% in 2004.
The deficit was $162 billion in 2007.
Excluding the surplus of $183.3 billion from Social Security and other trust funds, the on-balance deficit soared to $638 billion from $343 billion last year.
The government borrowed more than $1 trillion during the past 12 months, including nearly $300 billion in September alone to help the Federal Reserve finance its support for the beleaguered banking sector.
The public debt breached $10 trillion during the fiscal year, which ended Sept. 30.
Total receipts for the year fell to $2.52 trillion, or 17.8% of GDP, from $2.57 trillion a year ago. Total outlays rose to $2.98 trillion from $2.73 trillion. At 21% of GDP, federal spending consumed the largest share of the economy since 1994.
Outlays were boosted by payments by the Federal Deposit Insurance Corp. to take over failed banks, growth in military spending, the payments in the stimulus program, as well as automatic increases in programs such as unemployment benefits, food stamps and Medicaid.
In September alone, the government ran a surplus of $45.7 billion, compared with a surplus of $112.9 billion in September 2007.
In September, receipts fell to $272.4 billion from $285.4 billion the year before, while outlays rose to $226.7 billion from $172.5 billion last year.
