WASHINGTON - The federal government will have to borrow nearly 50 cents for every dollar it spends this year, exploding its record deficit past $1.8 trillion, the White House estimated yesterday.
New figures would add $89 billion to the red ink for the budget that ends Sept. 30, increasing it to more than four times last year's high as the government hands out billions more than expected for people who have lost jobs, and takes in less tax revenue from people and companies making less money.
The unprecedented deficit figures flow from the deep recession, the Wall Street bailout, and the cost of President Obama's economic stimulus bill, as well as a seemingly embedded structural imbalance between what the government spends and what it takes in.
As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House projected. The deterioration reflects lower tax revenue and higher costs for bank failures, unemployment benefits, and food stamps.
Just a few days ago, Obama touted a plan to cut $17 billion in wasteful or duplicative programs from the budget next year. The increase in the deficit announced yesterday is five times the size of those savings.
This year, the government would borrow 46 cents for every dollar it takes to run the government under the administration's plan. In 2010, it would borrow 35 cents for every dollar spent.
"The deficits . . . are driven in large part by the economic crisis inherited by this administration," budget director Peter Orszag wrote in a blog entry yesterday.