US to hit record $1.2 trillion budget deficit

WASHINGTON — The federal budget deficit will rise to a record $1.2 trillion this year, and a package of new spending increases and tax cuts planned by President-elect Barack Obama and congressional Democrats will push that figure higher, the Congressional Budget Office reported today. 

The deficit for the fiscal year 2007/2008 which ended in September reached 438 billion dollars, or 3.1 percent of the nation's gross domestic product, the office said in a report. 

However, the figures do not include the cost of a huge economic stimulus plan put forward by the future administration of president-elect Barack Obama which would cost upwards of 775 billion dollars. 

According to the report issued by the budget office, the deficit will fall to around 700 billion dollars, which is still one of the highest budget deficits in the nation's history. 

President-elect Barack Obama on Tuesday reluctantly acknowledged that he would likely inherit an economy on course for a trillion dollar deficit as he takes office. 

"One of the measures of irresponsibility that we've seen is the enormous federal debt that has accumulated, a number that has doubled in recent years," he told reporters. 

"At the current course and speed, a trillion-dollar deficit will be here before we even start the next budget," warned Obama, who takes office on January 20. 

"Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point," he added.