The actual US government deficit in the year 2008 was at 455 billion dollars and everyone was blaming it on mismanagement by George Bush administration. And that was a record high which everybody felt would never be breached again.
But the slow and steady sub-prime crisis started eating into jobs and also started killing banks and companies every month. And the new Obama administration which took charge in January 2009 is creating record of sorts on the deficit front.
The US trade deficit in 2009 is all set to touch 1.6 trillion dollars, dwarfing the 455 billion dollars deficit last year. The continuing fall in tax revenues for the government due to increasing unemployment and also reduced corporate profitability is only adding to the problem.
The 800 billion dollars stimulus plan is the key reason behind the record deficit which could not be avoided by the Obama administration due to failing banking system. The entire US banking industry came under severe stress and they needed billions of dollars of financial aid which has been funded by the government in the last one year.
The government pumped in tax payers money and borrowed money worth nearly half a billion dollars into insurance companies, banks, mortgage companies and also automobile companies.
US deficit to hit 1.6 trillion this year
September - 10 - 2009 - Thursday
