The Treasury Department released its monthly budget statement this afternoon and the results aren’t pretty. The federal government ran up its largest-ever monthly deficit in February at $220.9 billion, a 14 percent increase from a year ago.
The numbers for the fiscal year, which started in October, also indicate the government is on pace to exceed last year’s record deficit by a healthy margin. After the first five months the deficit stands at $651.6 billion, 10.5 percent above last year’s pace. The Obama Administration is forecasting an overall 2010 deficit of more than $1.56 trillion, as opposed to $1.4 trillion in fiscal 2009.
The month-to-month budget numbers don’t get a lot of attention as they aren’t seasonally adjusted, but there’s no denying that deficit spending continues to increase significantly even as President Obama has vowed to reign in discretionary spending. Among the factors driving the record spending is the $800 billion stimulus plan passed by Congress last year, which includes a number of tax credits aimed at kick-starting consumer spending.
All eyes will be watching this report in April, when the amount of tax inflows to the Treasury should give clearer indication of the country’s fiscal situation. If the deficit continues climbing at the current rate, expect others to start echoing Michael Kinsley’s concerns about future inflation.