U.S. Budget Deficit Hits Record High In 2008

October 14, 2008 9:27 p.m. EST

Washington, DC (AHN) - The U.S. budget deficit for fiscal year 2008 totaled $455 billion, topping the previous high of $413 billion in 2004 as slowing economic growth sparked huge government spending.

The fiscal year, for budget purposes ended Sept. 30. The 2008 result dwarfs last years deficit of $162 billion.

The Treasury said the deficit represented 3.2 percent of gross domestic product. That figure is second only to the 2004 deficit, which represented 3.6 percent of GDP.

"This year's budget results reflect the ongoing housing correction and the manifestation of that in strained capital markets and slower growth," Treasury Secretary Henry Paulson said in a statement, according to Bloomberg.com.

For 2008, total spending rose 9.1 percent to $2.98 trillion from last year. That is the largest year-over-year spending increase since a 9.6 percent jump in 1990. Military spending jumped 12.5 percent to $594.7 billion from a year ago.

The slowing economy showed its effects, as falling corporate profits led to corporate income tax revenue falling 18 percent from last year, to $304.3 billion.

"The eight years of this administration will include the five biggest budget deficits in history," said House Budget Committee Chairman John Spratt (D-SC), according to the Associated Press. "The resulting debt will be passed to our children and grandchildren."