WASHINGTON – The Treasury Department says the federal deficit swelled to $263.3 billion in the first five months of this budget year as record spending during the period outpaced record revenues.
The department's latest snapshot of the government's balance sheets, released Wednesday, shows that the deficit for the budget year that began Oct. 1 was up a whopping 62 percent from the red ink of $162.2 billion for the corresponding five-month period last year.
The latest year-to-date budget deficit of $263.3 billion was an all-time high, the government said.
Spending totaled a record $1.23 trillion, while revenues totaled $967.2 billion, also an all-time high.
For the month of February alone, the government ran a deficit of $175.6 billion, a record for any single month. That was larger than the shortfall of around $170 billion that economists were expecting.
One of the reasons the deficit was running higher was related to a calendar issue, the Congressional Budget Office said. Because March 1 fell on weekend, payments that the government would ordinarily have made in March were instead made at the end of February. That caused spending to be higher in February, contributing to the larger budget deficit.
The White House predicts that the deficit this year will increase to $410 billion, as the economic slowdown cuts into tax revenues. Many analysts predict economic growth will be feeble in the January-to-March quarter; a growing number believe the economy is actually shrinking now. Under one rough rule, the economy would need to contract for six straight months to be considered in a recession.
The Bush administration and many private economists are hopeful that the economic growth will pick up in the second half of 2008, as the government's $168 billion rescue package of tax rebates for people and tax breaks for businesses ripple through the economy. The Federal Reserve's interest rate reductions also should energize the economy in the second half of the year.
So far this budget year, the biggest spending categories are programs from the Health and Human Services Department, including Medicare and Medicaid, $292.9 billion; Social Security, $270.5 billion; military, $247.6 billion; and interest on the public debt, $198.5 billion.