BISINISS WORLD NEWS

WASHINGTON: The US posted its largest budget deficit on record in February as the government boosted spending to help revive the economy.

The excess of spending over revenue increased to $US221 billion last month, compared with a deficit of $US194 billion in February 2009, according to Treasury Department figures released today in Washington.

In fiscal 2009 that ended in September, the shortfall reached a record $US1.4 trillion.

A deficit that will probably exceed $US1 trillion for a second year underscores the challenges facing the Obama administration and Congress as they seek to preserve the recovery, spur job growth and pass health care reform.

The loss of 8.4 million jobs the last two years has been limiting tax revenue, while stimulus efforts such as the first-time homebuyers credit have added to expenses.

"It's mostly the recession if you look at the deficit numbers," said David Wyss, chief economist at Standard & Poor's in New York. To finance the shortfalls, "we're borrowing a lot of money from abroad. At some point, foreign investors are going to be unwilling to fund it," he said.

The February deficit was in line with the $US222 billion economists anticipated, based on the median of 31 estimates in a Bloomberg News survey. Projections ranged from shortfalls of $US180 billion to $US225 billion.

The non-partisan Congressional Budget Office, in a report issued March 5, projected a deficit of $US223 billion for February.

Spending for February increased 17 per cent from the same month a year ago, to $US328.4 billion. Revenue and other income rose 23 per cent to $US107.5 billion, according to the Treasury.