The U.S. federal budget deficit hit a new record in the just-completed 2008 budget year under the latest estimates from the Congressional Budget Office.

The record $438 billion for the budget year that ended last week is up from $162 billion posted last year. The previous record of $413 billion was posted in 2004.

The CBO said Tuesday that with the economy in a slump, revenues dropped by almost two per cent. Corporate income receipts dropped by $65 billion, or nearly 18 per cent. At the same time, individual income tax revenues declined by 1.6 per cent.

The deficit is virtually certain to balloon even higher next year as the government sorts out the financial crisis and taps a $700 billion treasury fund to buy toxic mortgage-related securities.

The next president is likely to have to scale back campaign pledges as he inherits a likely deficit for 2009 exceeding $500 billion. But neither GOP standard-bearer John McCain nor Democratic presidential nominee Barack Obama has given much detail regarding what promises they won't be able to keep.

The latest figures for 2008 are somewhat of a surprise, registering more than $30 billion more than CBO's update issued just last month and almost $50 billion higher than what the White House predicted in July.

The numbers also amplify President George W. Bush's poor record on the deficit. Virtually every administration promise on the deficit has failed to come to pass.

Bush inherited a budget seen as producing endless huge surpluses after four straight years in positive territory. That stretch of surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest expansion in U.S. history.

The deficit estimates for 2008 represent about three per cent of the size of the economy, which is the measure economists consider the most relevant. By that measure, the deficit is smaller than the deficits of the 1980s and early 1990s that led Congress and earlier administrations to cobble together politically painful deficit-reduction packages.

"Our children and grandchildren will be paying the price for years to come as they shoulder this growing burden of debt," said House budget committee chairman John Spratt Jr., a Democrat.

The Treasury Department is expected to release the official deficit tally by mid-month.