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U.S. deficit streak at 20 months

By Chavon Sutton, staff reporter

NEW YORK (CNNMoney.com) -- The government posted its 20th consecutive monthly deficit in May, according to data released Thursday by the Treasury Department.

The $135.9 billion shortfall brought the deficit for the first eight months of the fiscal year to $935.6 billion. That's down nearly 6% from $992.1 billion in the same period a year earlier, and below the $189.7 billion shortfall last May.

"The report seems consistent with (last week's) jobs report," said Bob Bixby, executive director for the Concord Coalition, a federal budget watchdog group. "We're in a holding pattern, keeping our head above water and waiting to see which way it's going to break." The government announced last week that 431,000 jobs were created in May, but only 41,000 of them in the private sector.

Receipts in May totaled $146.8 billion, up from $117.2 billion a year earlier, and outlays were $282.7 billion, down from $306.9 billion.

For the eight-month period, government outlays continued to outpace receipts, with the government collecting 8% less in individual income taxes - its largest revenue source - compared to the same period a year earlier. This decline was slightly offset by revenue from corporations, which jumped 17% above the prior year period.

Although there were slight shifts in the report, Bixby said his analysis found "nothing surprising."

The last time the government reported a surplus was just before the financial crisis in September 2008, when it posted a $45.7 billion gain. The Treasury Department's forecasts a deficit of $1.56 trillion by the end of the fiscal year, up from a record $1.41 trillion in fiscal 2009.

April marked only the third time in 30 years that the U.S. government spent more than it collected in revenue in that month, a period when Americans file their tax returns.

The magnitude of the measures used to stave off a complete economic meltdown led President Obama to sign legislation that increased the government's debt cap to a record high $14.3 trillion earlier this year. U.S. debt subject to that limit totaled $12.99 trillion as of Thursday.

In the wake of the debt crisis in Europe, the U.S. government has come under scrutiny, as many fear that it could share in a similar fate as debt-laden European countries such as Greece, Portugal and Spain. But Bixby says that it is no longer an immediate concern.

Still, the European crisis has stimulated demand for U.S. bonds as investors flee to save-haven investments. Bixby said this could prove troublesome for the United States, which has yet to address its debt issues, as interest rates inevitably rise above historic lows.

"Our problem isn't as acute as what they're facing in Europe, but it's the same disease," said Bixby. "They're just further along." To top of page

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