Why did the government operate with such a large budget deficit in late 2009 and 2010? Explain some plausible reasons for the budget deficit during this period

Massive decrease in tax revenues was related to excessive spending. Spending in 2009 was extremely higher than in 2008 by approximately 602 billion dollars exempting national debt payments. Around 18% of massive spending was used in provision of essential services such as Medicare, Medicaid and social security. The deficit was also as a result of low tax revenues, for instance, federal receipts in 2009 were 419 billion dollars less as compared to 2008. Individual income tax and corporate income taxes decreased by a greater percentage. This deficit is linked to economic recession. The reason for low corporate tax is due to low profits. Individuals lost jobs so they ended up paying low taxes and less investments. Operating on weak economy, more efforts were required to create jobs.