U.S. deficit could hit $1 trillion

NEW YORK, Oct. 15 (UPI) -- The U.S. government could rack up a $1 trillion budget deficit this fiscal year, depending on how the bank bailout program is accounted for, analysts say.

The non-partisan Washington organization Committee for a Responsible Federal Budget arrived at the $1 trillion estimate by taking government projections and adding possible further economic stimulus spending and the potential cost of the bailout program, The Christian Science Monitor reported Wednesday.

Should it reach that level, it would be the biggest share of any federal budget since the 1940s, the newspaper said. It would amount to another $8,620 of federal debt for each U.S. household.

"There are times when you need to run up the deficit and this is one of them," says Maya MacGuineas, the budget watchdog group's president. "But we ran them up when we did not need to, and we have no plan to stop running them up. We have become serial deficit spenders."

Barry Bosworth, a senior fellow at the Brookings Institution, a Washington think tank, said if the bailout program is treated as a loan or capital transaction, then the cost would be the difference between the initial expenditure and the amount the government expects to get back.

"Maybe it will be scored at a cost of $100 billion or higher. Otherwise, the budget deficit would be way over $1 trillion," Bosworth said.

If the deficit does reach $1 trillion this year, it would represent 7.5 percent of the gross domestic product, the highest percentage since World War II when it reached 30 percent of GDP.