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March 22, 2019 3:15 PM, EDT

US Posts Largest Monthly Budget Deficit on Record in February

Capitol Bloomberg News

The U.S. posted its biggest monthly budget deficit on record last month, amid falling corporate and individual tax revenue and increasing federal spending.

The budget gap widened to $234 billion in February, compared with a fiscal gap of $215.2 billion a year earlier. That gap surpassed the previous monthly record of $231.7 billion set seven years ago, according to data compiled by Bloomberg.

February’s shortfall helped push the deficit for the first five months of the government’s fiscal year to $544.2 billion, up almost 40% from the same period the previous year, the Treasury Department said in its monthly budget report March 22. The release was delayed a week by the government shutdown earlier this year.

Receipts dipped less than 1% to $1.3 trillion in the October-February period from the previous year, while spending accelerated 9% to $1.8 trillion.

The fiscal shortfall is widening after President Donald Trump’s $1.5 trillion tax-cuts package that’s weighing on receipts and raising concerns about the national debt load, which topped a record $22 trillion last month.

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Federal Reserve Chairman Jerome Powell reiterated his concern over the government deficit in a press conference March 20, saying that the nation’s growing debt pile needs to be addressed. At the same time, there’s a shift among some economists — led by proponents of Modern Monetary Theory — on the dangers of a growing deficit, with low inflation and cheap borrowing costs suggesting there’s room for additional spending.

The Treasury data show tax receipts declined for corporations and individuals in the five-month period, while revenue from customs duties almost doubled, boosted by income from tariffs imposed by the Trump administration.