US deficit sets £260bn record
The US budget deficit hit a record $455 billion (£260.6 billion) in the financial year just ended, way above the White House's most recent estimate of $389 billion.
The previous record of $413 billion was set in 2004, thanks to tax cuts and Iraq war spending. The Treasury's statement did not revise the $482 billion estimate for the deficit to next September, despite the commitment of potentially more than $1 trillion to save the country's banking system.
White House deputy budget director Steve McMillin said the Treasury's plan to spend $250 billion on buying preferred stock in financial institutions would be treated as a cash outlay and increase the deficit, but it could also produce revenue gains.
Analysts' forecasts for the 2009 deficit range from $500 billion to more than $1 trillion.
Treasury Secretary Hank Paulson said: "This year's budget results reflect the ongoing housing correction and the manifestations of that in strained capital markets and slower growth."
