US budget deficit was probably at an “all time high” and posted at USD$410 billion. It was very close to the US budget deficit of 2004, when the figure was USD$413 billion. The article below explores the probable reasons for the swell and evaluates the Federal government’s stand in the same.
The President of United States of America presented the budget for the FY 2009. The budget amount was USD$ 3,100 billion equivalent to 1,569 billion or 3,100 billion.
Reasons for the US Budget Deficit:
The increase in US budget deficit was very pronounced, the reason being attributed to the fact that the country was reeling under a wave of recession. The US budget deficit was found to be USD$410 billion. In other words, the budget deficit in the current year was 2.9% of the gross domestic product or GDP. This figure is almost close to what it was in the year 2004, when the budget deficit was recorded as USD$413 billion.
Decrease in tax revenues:
In the year 2007, the US budget deficit was USD$162 billion, which was the lowest recorded in five years.
Reports suggest that as of now, the spending of the federal government has been 8.3% more than what it was last year(2007). It is also being feared that owing to the sluggish economy, increase in tax revenues may be arrested.
There are suppositions that the stimulus plan, which has been approved by the Congress may puff up the US budget deficit further. The stimulus plan encompasses a fund allocation of USD$ 168 billion. However, it is also being anticipated that owing to the stimulus plan of the Congress, the impact, which the US economy would have faced due to recession may be diluted or at least may last for a shorter time span than it would have otherwise, had the stimulus plan not been implemented.
It was observed that US budget surplus(as of January) was USD$17.8 billion. In 2007 January, the budget surplus of United States was USD$ 38.2 billion. It shows a sharp decline over a couple of months. Nevertheless, few are of the opinion that during the month of January, budget usually has surplus as several tax payers make the necessary payments(refers to the quarterly tax payments).