World Economic

The U.S. budget deficit topped $1 trillion for the first nine months of the fiscal year and broke a monthly record for June as the recession subtracted from revenue and the government spent to rejuvenate the economy.

The shortfall for the fiscal year that began Oct. 1 totaled a record $1.1 trillion, the Treasury said in Washington. The excess of spending over revenue for June was $94.3 billion, the first deficit for that month since 1991, according to data compiled by Bloomberg.

Individual and corporate tax receipts are sliding even as the worst recession in five decades shows signs of easing, because the jobless rate continues to rise — reaching a 26-year high last month — and companies have yet to see a sustained rise in demand. The shortfall is also widening as the government ramps up spending from the $787 billion stimulus program President Barack Obama signed into law in February.

"When you have soaring costs in battling the economic crisis and bailing out corporations amid escalating unemployment and a rapidly eroding tax base, you get ballooning deficits," said Richard Yamarone, director of economic research at Argus Research Corp. before Monday’s report.

Economists surveyed by Bloomberg forecast a June deficit of $97 billion, according to the median of 30 estimates. Projections ranged from deficits of $70 billion to $109.3 billion.

The June deficit compares with a surplus of $33.5 billion in the same month a year earlier fast cash now. Spending last month surged 37 percent to $309.7 billion, and revenue fell 17 percent to $215.4 billion, the Treasury said.

The Congressional Budget Office estimates the federal budget shortfall for the first nine months of the fiscal year was also $1.1 trillion, while saying the budget deficit for June was $97 billion. For the fiscal year that ends Sept. 30, the Office of Management and Budget forecasts the deficit to reach a record $1.841 trillion, more than four times the previous fiscal year’s $459 billion shortfall.

The Treasury also said that for the fiscal year to date, it has spent $147.2 billion on the financial rescue plan called the Troubled Asset Relief Program, and $84.9 billion to purchase mortgage debt from government-sponsored enterprises including Fannie Mae and Freddie Mac, now in government conservatorship.

U.S. Treasury Secretary Timothy Geithner said in a letter to Sen. Judd Gregg last month that $70.1 billion in repayments from 32 banks that received government funds indicate financial firms are healing.

The banks have paid back funds from the $700 billion TARP program, enacted last year. Participating financial firms also have paid $5.2 billion in dividends to the U.S. government, Geithner said in the letter, dated June 30 and released July 7.

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