Waashington — The government ran the largest-ever budget deficit for a single month in February. The shortfall kept this year’s annual deficit on pace to end as the biggest in U.S. history.
The widening deficit reflects the impact of the tax-cut package President Barack Obama and congressional Republicans brokered in December.
As a result, the nonpartisan Congressional Budget Office in January raised its estimate for the annual deficit from $1.1 trillion to $1.5 trillion. It said the tax cuts would add $400 billion to this year’s gap. The budget year ends Sept. 30.
The tax-cut package extended income tax cuts, reduced workers’ Social Security taxes, extended unemployment benefits and accelerated business tax write-offs, among other steps.
February’s deficit of $222.5 billion eclipsed last February’s record by nearly $2 billion. The full-year deficit would exceed 2009’s record deficit of $1.41 trillion. And it would mark the third straight year of $1 trillion-plus deficits.
It’s unusual for an economy to be running record-high deficits this far into a recovery. The recession that began in December 2007 ended in June 2009. The problem is that the financial crisis and the recession that followed fueled explosive deficit growth.