The Obama administration has argued that the deficit was the price the country had to pay to pull the recession-ravaged economy back from the brink. But on Friday it promised to take measures to bring it back down.
Government spending rose 18.2 per cent from 2008, in part because of Tarp and the $787bn fiscal stimulus package. Such efforts to stabilise the economy accounted for a quarter of the deficit, the government said. Outlays for benefits such as food stamps and unemployment insurance were also pushed higher by the recession.
At the same time, tax revenues slumped 16.6 per cent as incomes and corporate profits declined.
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