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The U.S. budget deficit hit a record $1.4 trillion in the just-ended fiscal year, the government said on Friday, as the deep recession and a series of bank rescues cut a gaping hole in public finances.
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Tracy O US budget deficit hit a record $1.4 trillion |
The tally was $162 billion smaller than the White House had forecast in August, but still amounted to nearly 11 percent of real U.S. economic output, the most for any budget shortfall since World War Two.
President Barack Obama has pledged to rein in high budget deficits by addressing long-term challenges like health care and energy costs in a fiscally responsible way. But his critics argue that the health care reform efforts under consideration would add to the budget strain.
In August, the White House had forecast a $1.58 trillion deficit, more than three times as large as the $455 billion deficit racked up in the prior fiscal year.
The figure came in smaller than expected largely because of lower-than-expected spending out of the Troubled Assets Relief Program to rescue banks and other firms, the Obama administration said.
Rescuing the economy and some of the country's biggest banks from the worst recession since the Great Depression took a toll on U.S. finances, and the White House has forecast deficits of more than $1 trillion through fiscal 2011.
"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," Treasury Secretary Timothy Geithner said in a statement.
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In the short term, the state of the budget depends a great deal on the health of the economy.
If the recovery is sluggish and unemployment stays high, as some forecasts predict, spending on jobless benefits will remain high and revenues could come in lower than the White House expects.
But if growth comes in stronger than predicted and job creation resumes, the gap could be narrower.
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