U.S. government deficit seen headed to $490 billion next year (by Mike Maynard)

WASHINGTON (MarketWatch) -- The federal deficit will swell to nearly $490 billion during the government's 2009 fiscal year, according to a USA Today report citing a Bush admininstration budget update. The report also shows improvement in the deficit for fiscal 2008, now pegged at less than $400 billion, as tax revenue has held up better than anticipated in the face of the nation's economic downturn. The previous record for a budget deficit was $413 billion, in 2004. In current dollars, that would equate to $478 billion, USA Today reported. The wider deficit in the cards for fiscal 2009 in part reflects the impact of the $168 billion fiscal-stimulus package enacted earlier this year. As a proportion of the economy, the deficit for fiscal 2009 would be in a range of 3% to 4%, less than the post-World War II record of 6% set a quarter of a century ago under President Reagan.