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UPDATE 1-U.S. posts $165.9 bln May budget deficit

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WASHINGTON, June 11 (Reuters) - The U.S. government turned in a $165.93 billion budget deficit for May, a record for that month, as tax revenue fell and federal spending was pushed higher by a tax rebate program meant to stimulate the economy, the U.S. Treasury said on Tuesday.

The May deficit compared to a year-earlier deficit of $67.70 billion and was also larger than the $160.0 billion forecast by economists polled by Reuters.

Through the first eight months of the fiscal year, the Treasury saw a $319.4 billion deficit, which was largest since a $346 billion deficit at this point in 2004 when the federal budget hit a record $412.7 billion.

A Treasury spokesman estimated that tax rebates as part of an economic stimulus package added about $48 billion to the May shortfall.

May outlays grew to $290.2 billion, a record for May and for any month, from $231.9 billion May 2007, the Treasury said.

The May outlays were increased by $20 billion due to acceleration of some June benefits paid in May because June started on a Sunday.

May receipts fell to $124.3 billion from $164.2 billion in May 2007, the Treasury said, due partly to the tax rebates as well as slowing corporate and individual tax payments. (Reporting by Patrick Rucker; Editing by Neil Stempleman)

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