The United States ran up its second-highest budget deficit since World War II in the fiscal year that ended Sept. 30, though the $1.29 trillion figure was an improvement over last year, the nonpartisan Congressional Budget Office estimated Thursday.
The deficit amounted to 8.9 percent of gross domestic product in fiscal 2010 — better than last year's $1.4 trillion deficit, which amounted to about 10 percent of total economic output in goods and services, the CBO said.
An improved economy, higher Federal Reserve profits and greater receipts from corporate income taxes helped to narrow the budget gap, the CBO said.
The government also spent less on bailouts for banks, mortgage giants Fannie Mae and Freddie Mac, and federal deposit insurance, said the CBO.
Those savings helped offset higher payments for unemployment benefits, education, and state aid and other items contained in the $814 billion Recovery Act that passed in 2009.
The Treasury Department is expected to issue the official budget tally in coming weeks.
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