The U.S. budget deficit in 2009 is projected to spike to a record $1.2 trillion, or 8.3% of gross domestic product, the Congressional Budget Office said Wednesday.
“As a share of the economy, the deficit for this year is anticipated to be the largest recorded since World War II,” the CBO said in its annual budget and economic outlook report.
The current recession “will probably be the longest and the deepest since World War II,” the CBO said.
On Tuesday, Obama suggested the country could see trillion-dollar deficits potentially for years.
“Our problem is not just a deficit of dollars, it’s a deficit of accountability and a deficit of trust,” Obama said. “So change and reform can’t just be election-year slogans. They must become fundamental principles of government.”
Source: CNN Money
The budget office predicted that the unemployment rate, which was 6.7 percent in November, would climb above 9 percent by the end of 2009.
Part of his approach, the president-elect pledged, would be to eliminate wasteful spending. As expected, he announced the appointment of Nancy Killefer to the post of chief performance officer to head a “line by line” scrutiny of federal spending.
It estimated that tax revenue will sink by $166 billion, or 6.6 percent.
The agency said the deficit would equal 8.3 percent of gross domestic product, obliterating previous postwar record of 6 percent, reached in 1983 under President Ronald Reagan.