U.S. February budget deficit is largest on record
Saturday, March 12, 2011
The U.S. Treasury Department reported the government posted a monthly budget deficit of US$222.5 billion in February, the largest monthly deficit ever recorded. The February deficit, announced on Thursday, outstripped the February revenue gain of $110 billion.
The report comes at a time when the White House and both national political parties are under extreme pressure to reduce the deficit as well as the total U.S. debt. There is no agreement on how to reduce spending and increase government revenue, and both Democratic and Republican measures have been voted down.
Factors contributing to the February 2011 deficit compared to that of February 2010 included a 69% reduction in corporate tax receipts, and an increase of 29% in interest payments due on the U.S. debt. The government also spent more than in the previous February on entitlement programs, including an increase of 11% on Medicare. Government measures, such as an extension of unemployment insurance benefits, cuts in the payroll tax and some business tax reductions also contributed to the deficit.
The White House has predicted that the U.S. budget deficit will reach $1.6 trillion this year and then fall to $1.1 trillion in 2012. Treasury Secretary, Timothy Geithner, has warned that by April 15 of this year, the U.S. is likely to reach its $14.3 trillion borrowing limit.