The U.S. budget deficit in February reached a record $220.9 billion, despite rising revenues, and is 14 percent higher than in the same month last year, the U.S. Department of the Treasury announced on Wednesday.
The sharp increase in the deficit is largely attributed to a 17 percent surge in government spending, to nearly $328.43 billion, which is the highest amount of government spending ever recorded in the second month of the year. The jump in the budget deficit to record levels followed a reduction in the deficit in the previous two months. In January, it was reduced to $42.6 billion. Spending significantly increased primarily due to tax credits for citizens and companies, granted as part of a three-year government stimulus plan initiated in February 2009.
The deficit reached a record amount despite an increase in government revenues in February compared to the same month the previous year, marking the first increase since April 2008. Revenues rose by 23 percent, to $107.52 billion, mainly due to higher corporate tax and customs revenues. Since the beginning of the current fiscal year, which started in the U.S. on October 1, 2009, state revenues have been declining. The total budget deficit in the first five months of the fiscal year 2009/2010, up to the end of February, reached a record of over $651.6 billion. The White House warns that the deficit in the current year could swell to a record $1.555 trillion, due to increased government spending to support recovery from the worst recession in decades. This would exceed the record amount in the previous fiscal year of $1.415 trillion. (H)
