The federal government’s budget deficit grew by $222.5 billion in February, the largest one-month increase in history. Economists are forecasting the deficit for the year will be the biggest imbalance on record.
The Treasury Department says the February deficit surpassed the old record for any month, a $220.9 billion imbalance set in February 2010.
Through the first five months of this budget year, which began Oct. 1, the deficit totals $641.3 billion, 1.6 percent below the pace set last year.
However, economists are predicting the deficit for this year will exceed last year’s imbalance. The Congressional Budget Office is forecasting a $1.5 trillion gap, giving the country a third straight year of $1 trillion-plus deficits.
The swollen deficits reflect the impact of a severe recession on government revenues and efforts to jump-start growth with stimulus spending and stabilize the financial system with large bailouts.
President Barack Obama, when he sent Congress his new budget request last month, forecast a deficit of $1.56 trillion for this year. The current deficit record holder is a $1.41 trillion deficit in 2009. In 2010, the deficit remained above $1 trillion at $1.29 trillion.
This year’s deficit is expected to be higher than 2010 because of a package of tax cuts approved in December. The bipartisan agreement extended the Bush-era tax relief for two more years and made other changes aimed at giving the economy a boost.
The agreement provided a 2 percentage point cut in workers’ Social Security taxes this year and an accelerated tax write-off for businesses who invest in new equipment this year.
The government has run a deficit in February in 45 of the last 58 years. One reason for that is that the Internal Revenue Service is mailing out refunds to taxpayers while people who owe taxes often wait to pay until the April deadline.
Through the first five months of this budget year, the government’s revenues total $869 billion, up 8.6 percent from the same period a year ago, while government spending totals $1.51 trillion, a 4 percent increase.
One of the big increases in spending was in interest payments on the debt, which totals $94.5 billion so far this budget year, up 9.3 percent from the same period a year ago. That reflects the growing size of the national debt because of the huge annual deficits.
Republicans won control of the House and more seats in the Senate by tapping in to voter unhappiness over the deficits. They are pushing for more than $60 billion in spending cuts this year to help shrink the deficit.
But Obama and congressional Democrats are objecting to the level of cuts, which they say will adversely affect education, college aid and support for low-income groups.