WASHINGTON (CN) – The Obama administration announced a staggering $1.4 trillion deficit for the 2009 fiscal year, the biggest deficit since 1945 as a percentage of gross domestic product. But officials said they had achieved a smaller deficit than expected and blamed the past administration for the magnitude of the problem.
The deficit is $162 billion less than predicted by the Obama administration, tough still tremendous. It is almost $1 trillion more than the $459 billion shortfall of fiscal 2008.
The 2009 deficit is nearly 10 percent of gross domestic product; the 2008 shortfall was about 3.2 percent of GDP.
The ratio of deficit to GDP has not been this high since 1945, the final year of World War II.
Generally, economists maintain that annual deficits should not surpass 3 percent of GDP. The United States would not be qualified to adopt the euro if it were a member of the European Union, where countries must restrict their deficits to 3 percent of GDP.
“The FY 2009 deficit was largely the product of the spending and tax policies inherited from the previous administration,” the White House said in a statement.
Despite the staggering figure, the administration still saw reason for hope. “This year’s deficit is lower than we had projected earlier this year, in part because we are managing to repair the financial system at a lower cost to taxpayers,” Treasury Secretary Timothy Geithner said.
Fiscal year 2009 ended Sept. 30; the figures were released Friday.
“It was critical that we acted to bring the economy back from the brink earlier this year,” Office of Management and Budget Director Peter Orszag said. “As we move from rescue to recovery, the president recognizes that we need to put the nation back on a fiscally sustainable path,” he added, suggesting that the administration will begin addressing the deficit in the 2011 budget.