President Barack Obama forecast the biggest US deficit since the second World War in a budget today that urges a costly overhaul of the healthcare system and would spend billions to arrest the economy's freefall.
An eye-popping $1.75 trillion (€1.36 trillion) deficit for the 2009 fiscal year is projected in Mr Obama's first budget. That is equal to 12.3 per cent of US gross domestic product, the largest share since 1945 when the country ran a shortfall of 21.5 per cent of GDP.
The budget was scheduled to be released at 4pm (Irish time) but the White House released it early after details began to leak out in the news media.
In 2010, the deficit would dip to a still-huge $1.17 trillion (€0.91 trillion), but Mr Obama promised to get the red ink under control within a few years through a combination of tax increases and spending cuts.
"While we must add to our deficits in the short term to provide immediate relief to families and get our economy moving, it is only by restoring fiscal discipline that we can produce sustained growth and shared prosperity," Mr Obama said at the White House.
The proposed $3.55 trillion (€2.77 trillion) spending plan for the 2010 fiscal year that begins October 1st provides the broad outlines of a more detailed one to be released in April.
The soaring deficit figure sent US Treasury bond prices lower and yields up to three week highs today.
The budget requires passage by Congress to take effect.
While Mr Obama, a Democrat, has broad support with both chambers in Congress controlled by his party, he could face a fight as the sticker shock of huge deficits lead to wariness about more spending for goals such as the healthcare overhaul.
Reuters