By Martin Crutsinger, AP Economics Writer
WASHINGTON (AP) — The federal budget deficit has surged to an all-time high of $1.42 trillion as the recession caused tax revenues to plunge while the government was spending massive amounts to stabilize the financial system and jump-start the economy.
The imbalance for the budget year ended Sept. 30, more than tripled last year's record. The Obama administration projects deficits will total $9.1 trillion over the next decade unless corrective action is taken.
As a portion of the economy, the budget deficit stood at 10%, the highest since World War II, according to government data released Friday.
President Barack Obama has pledged to reduce the deficit once the Great Recession ends and the unemployment rate starts falling. But economists worry the government lacks the will to make the hard political choices to cut spending and raise taxes to get control of the imbalances.
For 2009, the government collected $2.10 trillion in revenues, a 16.6% drop from 2008. That was the largest percentage decline on records going back nearly seven decades. The plunge reflected declining income tax collections as millions of Americans lost their jobs or saw their wages cut. Corporate taxes also plummeted as the recession squeezed companies' profit margins.
Government spending last year jumped to $3.52 trillion, up 18.2% over 2008, the biggest percentage increase since a 23.4% jump in 1975, another year in which the country was struggling with a painful recession. The $700 billion financial bailout fund and increased spending and tax relief from the $787 billion economic stimulus program that Obama pushed through Congress in February drove the 2009 increase.
Republicans seized on the new figures as evidence of their contention that the Democrats in Congress and the White House are acting irresponsibly.
"Today's deficit numbers are yet another troubling reminder that our nation is on a dangerous and unsustainable fiscal path," House Republican Leader John Boehner said in a statement.