WASHINGTON (AP) — The federal government's budget deficit grew by $50 billion in January and is expected to finish the year as the highest in history.
The Treasury Department said Thursday the deficit was one of the highest ever for the month of January, second only to the $63 billion deficit recorded two years ago. For the first four months of this budget year, the deficit totaled $418.8 billion, 2.7% lower than the same period a year ago.
However, this improving trend is expected to reverse in coming months. The Congressional Budget Office is projecting a record deficit of $1.5 trillion this budget year, which ends in September. The estimate was revised upward last month based on a tax-cut package brokered between the White House and Republicans that will add $400 billion to this year's red ink.
That will mark the third consecutive year that the government's deficit has been over $1 trillion, unprecedented imbalances that have been caused by the worst recession since the 1930s. That meant a sharp drop in government tax collections as millions of people lost their jobs while at the same time the government was boosting spending to stimulate the economy and stabilize the banking system.
While President Barack Obama contended that the downturn would have been much worse without all of the government spending, Republicans took control of the House in the last election and picked up seats in the Senate by vowing to attack all of the deficit spending.