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US says budget gap nearing US$1t

THE United States Treasury Department said on Friday that the budget deficit soared to US$192.3 billion in March and is nearing US$1 trillion just halfway through the budget year, largely because of mounting costs of the financial bailout and recession.

Last month's deficit, a record for March, was significantly higher than the US$150 billion that economists expected. The deficit already totals US$956.8 billion for the first six months of the budget year, also a record for that period. The Obama administration projects the deficit for the entire year will hit US$1.75 trillion.

A deficit at that level would nearly quadruple the previous yearly record of US$454.8 billion set last year. The March deficit was four times the size of the imbalance in the same month last year.

Almost US$300 billion provided to the nation's banks and other companies to cope with the most severe financial crisis in seven decades has pushed government spending higher.

The Treasury report said that through the end of March, US$293.4 billion had been provided to support companies through the US$700 billion bailout fund Congress passed last October. That support has been provided mainly to banks, although insurance giant American International Group Inc and auto companies General Motors Corp and Chrysler LLC also have received aid.

Besides the bailout fund, Fannie Mae and Freddie Mac, semiprivate home mortgage giants, got US$46 billion last month, bringing the total help to them to US$59.8 billion since October. The government took control of both last September after they had suffered billions of dollars in mortgage losses.

Through the first six months of the budget year that began on October 1, tax revenues have totaled US$989.8 billion, down 13.6 percent from the year-ago period. The government's receipts have been reduced sharply by the recession, which is shaping up to be the longest of the post-World War II period. The downturn began in December 2007.

Government outlays totaled US$1.95 trillion through March, 33.4 percent higher than the year-ago period. Besides higher payments for the financial rescue, the government is paying more in such areas as jobless claims and food stamps.

The Treasury report showed benefit payments from the unemployment trust fund totaled US$44.6 billion so far this budget year, up from US$19.4 billion last year.

The Congressional Budget Office estimated last month that President Barack Obama's budget proposals would produce US$9.3 trillion in deficits over the next decade - US$2.3 trillion higher than estimates made in February.


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