CBO Says Federal Deficit Hit Record $1.4 Trillion for Fiscal Year 2009

ABC News' Matthew Jaffe reports: The federal deficit reached a record $1.4 trillion in the 2009 fiscal year, according to an analysis released Wednesday by the Congressional Budget Office.

The report is not the actual deficit figure, which will be released later this month by the Treasury Department.

The year’s record-high deficit of $1.4 trillion equaled 9.9 percent of the nation’s gross domestic product, the CBO said. It is the highest shortfall relative to the size of the overall economy since 1945.

The record shortfall stems from an increase in spending to stop the recession, bailout the financial industry, and take over mortgage giants Fannie Mae and Freddie Mac, as well as a decline in tax revenues.

For the year, CBO said revenues dropped by $420 billion from 2008 receipts, a fall of 17 percent. The revenues totaled about 15 percent of GDP, the CBO found, the lowest level in more than half a century. Meanwhile, outlays were up $530 billion from a year earlier, an 18 percent increase, equal to nearly 25 percent of GDP, the highest level in more than half a century.

The previous record deficit of $459 billion was set last year by the Bush administration.

In August, the Obama administration projected the year-enddeficitto be $1.58 trillion. The CBO’s estimate is based on daily Treasury statements and CBO’s own projections.

“Top Line” — Health Care Reform Without Adding to Deficit: Obama’s Impossible Dream?

ABC News’ Rick Klein reports: President Obama today reiterated his pledge that health care reform will “not add a dime to the deficit, now or in the future” — a critical component of his sales pitch to a public that’s growing increasingly concerned about government spending.

But is that a promise he can keep?

On ABCNews.com’s “Top Line” today, Douglas Holtz-Eakin, a former director of the Congressional Budget Office, said he doesn’t think so — not with health care spending growing far faster than the rate of new revenues.

“I think the fundamental problem is that if you cover everybody, you put everyone in a system that is growing too rapidly in costs, and is added onto an entitlement problem where we already don’t have the revenues to pay for it,” Holtz-Eakin told us. “And so you build a big problem up front and there’s no way to unwind that quickly. A way to get there is to be more patient and sequential. Cover targeted groups like working uninsured and as you get savings, channel them back in and cover more people.”

“But the political patience isn’t there for that. The promise has been made to cover everyone, and I don’t think it’ll ever add up,” he said.

Democrats’ last best chance at producing a product that doesn’t add to the deficit is likely to come this week, as the Senate Finance Committee finishes its long-delayed draft of a health care bill. The CBO is expected to release its cost estimates of that bill this week as well.

“They may be frustrated but this shouldn’t be a matter of surprise,” Holtz-Eakin said. “[CBO] put out in January their view of options that would change health care spending. They’ve worked with the staffs on all the drafts of the bills. They’ve talked about things that work [and] don’t work, nd so when they finally get down to putting out these final reports, everyone should know what’s coming. And what they’ll look at when they get a bill from the Senate Finance Committee is number one: How much does it cost? They’re not going to know for sure.”

Holtz-Eakin, who was a top adviser to Sen. John McCain’s presidential campaign, also joked about what it’s like to see the president own ideas McCain once espoused, such as subjecting health insurance coverage to taxation, and the creation of “high-risk pools” for those with preexisting health conditions.

“Democrats have been phenomenal advocates of most of the McCain plan,” he said. “They will in fact propose the entire McCain plan, and we’ll see how it happens. But substantively this isn’t the same proposal. . . . [T]hey’re going to make the effort to put out a bipartisan proposal in this way, but when the rubber hits the road it’s not there.”

Watch the full interview with Doug Holtz-Eakin HERE.

We also chatted with Politico columnist Roger Simon about the health care push and the latest trouble signs for the president in the new ABC News/Washington Post poll.

Click HERE to see the discussion with Roger Simon.

“Top Line” — Health Care Reform Without Adding to Deficit: Obama’s Impossible Dream?

ABC News’ Rick Klein reports: President Obama today reiterated his pledge that health care reform will “not add a dime to the deficit, now or in the future” — a critical component of his sales pitch to a public that’s growing increasingly concerned about government spending.

But is that a promise he can keep?

On ABCNews.com’s “Top Line” today, Douglas Holtz-Eakin, a former director of the Congressional Budget Office, said he doesn’t think so — not with health care spending growing far faster than the rate of new revenues.

“I think the fundamental problem is that if you cover everybody, you put everyone in a system that is growing too rapidly in costs, and is added onto an entitlement problem where we already don’t have the revenues to pay for it,” Holtz-Eakin told us. “And so you build a big problem up front and there’s no way to unwind that quickly. A way to get there is to be more patient and sequential. Cover targeted groups like working uninsured and as you get savings, channel them back in and cover more people.”

“But the political patience isn’t there for that. The promise has been made to cover everyone, and I don’t think it’ll ever add up,” he said.

Democrats’ last best chance at producing a product that doesn’t add to the deficit is likely to come this week, as the Senate Finance Committee finishes its long-delayed draft of a health care bill. The CBO is expected to release its cost estimates of that bill this week as well.

“They may be frustrated but this shouldn’t be a matter of surprise,” Holtz-Eakin said. “[CBO] put out in January their view of options that would change health care spending. They’ve worked with the staffs on all the drafts of the bills. They’ve talked about things that work [and] don’t work, nd so when they finally get down to putting out these final reports, everyone should know what’s coming. And what they’ll look at when they get a bill from the Senate Finance Committee is number one: How much does it cost? They’re not going to know for sure.”

Holtz-Eakin, who was a top adviser to Sen. John McCain’s presidential campaign, also joked about what it’s like to see the president own ideas McCain once espoused, such as subjecting health insurance coverage to taxation, and the creation of “high-risk pools” for those with preexisting health conditions.

“Democrats have been phenomenal advocates of most of the McCain plan,” he said. “They will in fact propose the entire McCain plan, and we’ll see how it happens. But substantively this isn’t the same proposal. . . . [T]hey’re going to make the effort to put out a bipartisan proposal in this way, but when the rubber hits the road it’s not there.”

Watch the full interview with Doug Holtz-Eakin HERE.

We also chatted with Politico columnist Roger Simon about the health care push and the latest trouble signs for the president in the new ABC News/Washington Post poll.

Click HERE to see the discussion with Roger Simon.