Federal budget deficit up more than 60%
Government spending rises to trillion-dollar range while revenue is up slightly.
NEW YORK (CNNMoney.com) -- The federal budget deficit for the first five months of this fiscal year has risen more than 60% from the prior year after ballooning by more than expected in February, the Treasury Department said Wednesday.
In its monthly finance review, the Treasury Department said the budget deficit totaled $263.3 billion for the fiscal year that began Oct. 1, up from $162.2 billion reported in the same period a year earlier.
The deficit for the month of February reached $175.6 billion. A consensus of analysts polled by Briefing.com expected a budget deficit for the month of $170 billion.
Thus far, government spending has risen 10.2% to $1.2 trillion compared to the previous year, while revenue has risen only 1.3% to $967.2 billion.
"In the short run, given the economy is weak, budget deficit is probably a good thing because that means the government is spending money to stimulate the economy," said Gus Faucher, an economist with Moody's Economy.com.
Faucher said that we still have yet to see the affect of the government's stimulus package. Stimulus rebate checks - $600 for individuals and $1200 for couples filing jointly, plus $300 per child - are expected to be mailed out to qualifying households in May.
The government projected that the budget deficit for all of fiscal 2008, which includes stimulus package spending, will total $410 billion, unchanged from last month's estimate, and near 2004's record high of $413 billion.
However, "budget deficit in the long-term means that the government is essentially soaking up money that would normally be invested in the private sector to grow the economy," added Faucher.
Congress began debating two rival plans Wednesday aimed at balancing the budget. One, backed by Democrats, would rely on tax hikes when President Bush's tax cuts expire in about three years.
The other, backed by Republicans, would preserve the tax cuts, but slash costly entitlement programs such as Medicare and housing. 
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