The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program. The U.S. remains on track to hit a record deficit of $1 trillion or more for the entire year, which would be more than double the previous all-time high set last year. The Treasury Department said Wednesday that the gap between the government's revenue collections and what it paid out last month totaled $164.4 billion, the largest deficit ever recorded for the month of November. In just the first two months of this budget year, the deficit now totals $401.6 billion. A deficit of $1 trillion for the year would set a new record-high in dollar terms, and would be the largest as a percentage of the overall economy since World War II. A $1 trillion gap would equal 6.7 percent of the gross domestic product, the economy's total output in a single year. That would surpass the previous postwar high of 6 percent in GDP terms set in 1983 when Ronald Reagan was president. And some economists think estimates of a $1 trillion deficit for this year are too low. David Rosenberg, North American economist at Merrill Lynch, projected that it could reach $1.5 trillion, depending on how large an economic stimulus package is approved next year. While the November deficit was slightly lower than the $172.5 billion that economists had been expecting, the total for the past two months is well above the red ink ever recorded in a similar two-month period. The deficit is being driven higher by the $700 billion rescue package Congress passed on Oct. 3 in an effort to deal with the most serious financial crisis to hit the country since the 1930s. The Treasury Department plans to use $250 billion of the $700 billion program to make direct purchases of bank stock, providing the nation's financial institutions with an infusion of cash in the hopes that they will resume more normal lending practices.
