Government went deeper in red in 2009: Treasury

WASHINGTON (Reuters) - The government's financial position, reported on an accrual basis that more accurately accounts for long-term liabilities, continued to deteriorate in fiscal 2009, a report issued by the Treasury Department on Friday showed.

The government's net position, after deducting liabilities from assets, was in shortfall by $11.46 trillion in the fiscal year that ended Sept 30, 2009, compared with $10.2 trillion in fiscal 2008.

Its net operating costs for fiscal 2009 were $1.3 trillion, up from $1 trillion in fiscal 2008 because of weaker revenues and spending to try to revive the economy, Treasury Secretary Timothy Geithner said in a foreword to the report.

"The increase was largely due to increased costs for mandatory spending programs, such as unemployment insurance, Social Security, Medicaid and Medicare benefits, continued investment in the economic recovery effort, and more than a $400 billion decrease in tax revenue due to the economic downturn," Geithner said.

The accrual-accounting report is issued once a year and aims to take into account not only the government's operating costs and the sources used for financing them but also attempts to measure how much the government owns and owes.

Geithner said "unprecedented government intervention" had been necessary to stabilize the economy but said that confidence in financial markets "has been largely restored."

Federal Reserve Chairman Ben Bernanke warned Congress this week that it needed to agree on a credible plan soon to get deficits under control or risk losing the confidence of investors who buy debt.

The report issued by Treasury said that "in the absence of policy changes, large and increasing primary deficits" were coming that will require issuing more debt to finance and also add to the burden of paying interest on the debt.

(Reporting by Glenn Somerville)