February Sees Record U.S. Federal Budget Deficit
I was in America some weeks ago and while looking at London cheap flights for my return trip home I heard on the news that the U.S. federal budget deficit had seen a record increase in February. Wow. The strange thing was that I was not surprised.
The U.S. federal budget deficit (excess federal government expenditures less revenues) increased by $222.5 billion in February 2011. This is the highest one-month deficit growth in the nation’s history.
This new figure unseats the former record, a one-month growth of $220.9 billion in February 2010. Economic experts predict that the deficit growth for this year will be the greatest in U.S. history. Historically, in the past 58 years, the month of February is usually a deficit month, running a deficit 45 times. What is startling in the current February deficit is its unprecedented increase from the previous month.
As government expenditures increase in a sluggish recessionary economy (increased government bailouts and assistance payments) while revenues decrease (lower tax receipts and tax cuts), the federal budget deficit will continue to balloon with no signs of slowing in the near future.
Shrinking the deficit will require some difficult decisions. On the expenditure front, while there is undoubtedly “fat"and waste to be cut in government spending, there are also necessary programs for people in need, such as assistance for seniors, children, and low-income groups as well as education-related programs. Increasing revenues may also require short term spending increases (such as economic stimulus expenditures) which will also cause the deficit to grow in the short term.
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