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US February deficit hits a record $221bn as it spends to aid recovery

THE US posted a record $220.91bn (£147bn) budget deficit in February, Treasury Department data revealed yesterday.

The February deficit was in line with analysts’ consensus forecast in a Reuters poll for a $222bn budget gap but well above the $193.86bn for the same period a year ago.

The department said the budget gap for fiscal year 2010 to date was a record $651.60bn, well above the $589.80bn posted for the same period in fiscal year 2009. The government has now posted a budget deficit for 17 straight months, the Treasury Department said.

In February, outlays rose to $328.43bn from $281.17bn in February 2009 and was the largest on record for a February, the department said.

A Congressional Budget Office (CBO) analysis said “spending for several refundable tax credits, in particular, for the new Making Work Pay Credit that was enacted in the American Recovery and Reinvestment Act accounted for the largest part of that growth.”

Receipts rose to $107.52bn from $87.31bn in February 2009, the department said. Receipts also posted their first increase year-on-year since April 2008.

The CBO analysis attributed much of the gain in receipts to a $7bn increase in net corporate receipts.

The CBO analysis said a gain of almost $6bn in receipts from the Federal Reserve also contributed to the increase in total receipts in February, as did lower individual income tax refunds.