U.S. Budget Deficit Hits $39.4 Billion in May

The federal budget deficit soared to $39.4 billion in May, the largest imbalance in a year, the Treasury Department said Wednesday.

The flood of red ink in May left the government’s budget deficit for the first eight months of the fiscal year at $165.8 billion, 3.2% ahead of the pace set last year.

In 1985, the government ran up a record deficit of $211.9 billion. The Administration expects this year’s deficit to be $202.8 billion, with the reduction coming from budget cuts required under the Gramm-Rudman deficit-reduction law.

The big May deficit followed a surplus of $9.9 billion in April. Last-minute tax returns normally produce an April surplus while May is usually the month with the biggest budget deficit, as revenues decrease while spending remains constant or rises.

The imbalance last month was the largest deficit since a record $42 billion in May, 1985.