Oct. 8 (Bloomberg) -- The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.
The deficit amounted to 9.9 percent of the nation’s economy, triple the size of the shortfall for 2008.
The nonpartisan CBO said yesterday the government was squeezed on both sides of the budget ledger in the fiscal year that ended Sept. 30. Tax revenue fell by $420 billion, or 17 percent, to the lowest level in more than 50 years.
Individual income taxes, the biggest source of tax receipts, fell by 20 percent, the agency said. Corporate income taxes dropped by 54 percent, reflecting the slow economy.
At the same time, federal spending rose by 18 percent, the CBO said. About half of the spending increase, $245 billion, was driven by the costs of bailing out the financial industry and taking over mortgage financiers Fannie Mae and Freddie Mac.
The spending increases and tax cuts included in the economic stimulus package approved in February added almost $200 billion to the 2009 deficit, the CBO said.
Obama administration officials and Democratic leaders in Congress have expressed reluctance about pushing for a second stimulus package. Still, with unemployment on the rise and likely to reach 10 percent by the end of the year, President Barack Obama and his advisers are considering a mix of spending programs and tax cuts aimed at boosting the economy.
White House Meeting
Obama met at the White House yesterday with Senate Majority Leader Harry Reid, a Nevada Democrat, and House Speaker Nancy Pelosi, a California Democrat, to discuss the proposals.
Steps under consideration include extending unemployment insurance benefits and an $8,000 tax credit to help first-time homebuyers that is due to expire later this year.
“We have been working with Congress for quite some time on this,” White House press secretary Robert Gibbs said Oct. 6. “I think there’s bipartisan agreement to extend the safety net to ensure that those that have fallen on hard times and have lost their job have the benefits they need to provide for their families.”
The CBO’s deficit estimate is based on U.S. Treasury data and its own estimates. The Treasury Department will report the actual 2009 deficit later this month.
To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net;
To contact the editor responsible for this story: Jim Kirk in Washington at jkirk12@bloomberg.net
According to the US Congressional Budget Office (CBO), the US budget deficit reached a record $1.4 trillion in the fiscal year to September 30.

The deficit was about 9.9% of the country's GDP, over three times the level in 2008 and the highest since the Second World War ended. Economical analysts had initially predicted a deficit of $1.6 trillion.

The deficit was blamed on decreased tax revenues and higher government spending. The CBO also said on Wednesday that tax revenue dropped by 17%, or $420 billion, to its lowest level for over half a century.

The previous record deficit was in 2008, at $459 billion.