Annual report shows government’s financial position hit $11.46 trillion deficit in 2009
The federal government fell further into the red in 2009, with its financial position hitting a deficit of $11.46 trillion.
That figure is 12.3 percent higher than the previous year, according to a new report issued by the Treasury Department on Friday.
The annual report shows that the government’s big entitlement programs such as Social Security and Medicare are facing a deficit over the next 75 years of $45.88 trillion, an increase in that deficit of $2.9 trillion in just one year.
The $11.46 trillion deficit in the government’s net financial position in 2009 represents an increase of $1.25 trillion over 2008. The position reflects the government’s assets, such as cash, property and investments, minus liabilities, such as the federal debt held by the public.
The new figures are included in the “2009 Financial Report of the United States Government.” For more than a decade, Congress has required the executive branch to produce the report to provide a more accurate picture of the government’s liabilities. It uses the accrual method of accounting rather than the cash system used in reporting the federal government’s annual budget deficits.
Under the cash accounting system, the federal budget deficit for 2009, the budget year that ended on Sept. 30, soared to an all-time high of $1.42 trillion, surpassing the previous record of $454.8 billion set in 2008.
The deficit surge reflects a deep recession that has cut into tax revenues and boosted spending on such programs as unemployment insurance and economic stimulus packages.
The Obama administration, which is projecting that this year’s deficit will climb to $1.56 trillion, has argued that the country has to run huge deficits to battle the recession. President Barack Obama has pledged to deal with the deficits once unemployment starts coming down and the economy is on a sustained growth path.
Obama on Friday named four more members to a deficit commission he has created. It is charged with coming up with recommendations for getting the deficits under control by 2015.
Republican critics of the administration’s fiscal policies have charged that Obama is being too tentative in attacking the nation’s deficit problem. They have argued that without stronger resolve, foreign nations who hold a large amount of the government’s debt will start dumping those holdings, which could drive up interest rates, raising the borrowing costs for the government and American consumers and businesses.
Rep. Jim Cooper, D-Tenn., said that the new financial report released Friday showed in stark terms the dangers facing the country.
“Once again, the American people can see the true cost of inaction when it comes to our long-term budget shortfall,” Cooper said in a statement. He said that the deficit commission created by Obama was “one of our last chances to steer clear of a fiscal iceberg.”
Under the accrual method of accounting, expenses are recorded when they are incurred rather than whey they are paid. That better reflects the costs for liabilities such as pensions and health insurance.
In a statement accompanying the report, Treasury Secretary Timothy Geithner said, “Once we have strong growth in place, we must begin the process of bringing down our deficits to sustainable levels.”
The General Accountability Office, the auditing arm of Congress, said it could not sign off on the government’s books because of serious financial management problems at the Defense Department and other financial shortcomings.
Gene L. Dodaro, the acting head of the GAO, did say in a statement that “financial management has improved significantly since the government began preparing consolidated financial statements” 13 years ago.