US tax rebates widen budget gap

A $168bn economic stimulus plan is putting strain on the public purse

The US budget deficit widened in May to almost double what it was a year ago, US Treasury figures show.

US public sector debt stood at $165.9bn (£84.5bn) last month, compared with $67.7bn a year earlier.

The shortfall was mainly attributed to $48bn in tax rebates handed to US consumers as part of a $168bn plan to revive the country's economy.

The Treasury saw a $319.4bn gap for the first eight months of the year, just below the all-time record set in 2004.

In 2004, the budget deficit hit an all-time high for this period at $346bn and a record $413bn for the whole 12 months.

Some economists believe that this year's deficit will exceed those records, reflecting the tax rebate payments and incentives offered to businesses in addition to lower tax receipts as US economic growth slows.

Part of the increase in the May deficit were blamed on the timing for $20bn of government outlays due in June but paid in May because 1 June was a Sunday.