U.S. Budget Deficit Down 36.6%

WASHINGTON (AP) -- The U.S. government's deficit through the first four months of this budget year is down 36.6% from a year earlier, signaling further improvement in the nation's finances.

In its monthly budget report, the Treasury Department said Wednesday that the deficit for January was $10.4 billion.

For the period from October through January, it totaled $184 billion. That is down $106.4 billion from the same period a year ago and puts the country on track for a further improvement in the budget deficit.

The Congressional Budget Office is projecting that the deficit for the current budget year will decline to $514 billion. That would be the smallest imbalance in six years. The deficit last year was $680.2 billion.

Rising tax revenues from an improving economy and government spending constraints are helping to trim the deficit.

The CBO's deficit projection for this year would represent a drop of 24% over the 2013 deficit and would be the smallest gap since a $458.6 billion deficit in 2008.

The deficit hit an all-time high of $1.4 trillion in 2009 and remained above $1 trillion for four straight years as a deep recession and weak recovery pinched government revenues and forced higher spending for such programs as food stamps and unemployment benefits.

The CBO's latest forecast issued earlier this month projected that the deficit will decline to $478 billion in 2015 before starting to rise again in 2016 and keep heading higher for the rest of the decade.

CBO projected the deficit would once again top $1 trillion in 2022 and remain above that level over the rest of its 10-year forecasting window. The rising deficits during this period will stem from big increases in spending on government benefit programs such as Social Security and Medicare, reflecting the retirement of baby boomers.

Through the first four months of this budget year, which began Oct. 1, government revenues totaled $960.6 billion, an increase of 8.2% from the same period a year ago. Government spending totaled $1.14 trillion, down 2.8% from a year ago, reflecting in part across-the-board spending reductions imposed as part of the 2011 deficit agreement.

A $40 billion quarterly payment from Fannie Mae and Freddie Mac helped boost December to a $53.2 billion surplus. The next quarterly payment will come in March. An improving housing market is allowing the companies to repay their taxpayer assistance after being rescued by the government in September 2008. The companies make those payments at the end of each quarter.

Congress reached agreement in December on a budget deal aimed at bringing some stability to the budget process for the next two years. A battle over the budget resulted in a 16-day partial government shutdown in October.

And on Tuesday, the House passed legislation to suspend the debt ceiling until March 16 of next year. This measure, which the Senate was expected to approve later Wednesday, will eliminate another potential flashpoint in the budget wars.

The House vote came after Treasury Secretary Jacob Lew began taking extraordinary measures to avoid breaching the current $17.2 trillion debt limit. Lew had warned that Congress would only have until the end of this month to approve a new debt ceiling and avert a market-rattling default on the debt.

Many House Republicans wanted to use the need to increase the debt ceiling to extract budget concessions from the Obama administration. However, they backed away from that battle after GOP lawmakers were unable to agree on what concession to demand from Democrats. The White House had insisted that President Barack Obama would not negotiate over the debt limit.

The 221-201 House vote on Tuesday came just hours after House Speaker John Boehner announced that his party was relenting on the issue.

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  • Report this Comment On February 12, 2014, at 8:38 PM, neamakri wrote:

    "deficit down 36%"

    Suppose you got stabbed and in the ER the doctor said "your bleeding is down 36%" Would you be happy? Probably not very. You would still be bleeding.

    Mark Twain said "there are lies, damn lies, and statistics."

    I will throw a block party when the deficit for that year's budget is zero.

  • Report this Comment On February 12, 2014, at 8:59 PM, urbuddymac wrote:

    Kudos neamakri, I couldn't put it better myself.

    There is B.S. and then there are PhD's...

    (Piled Higher and Deeper).

    This is a prime example of PhD B.S.

    Essentially all 50 states have a balanced budget amendment mandating a balanced budget every year by law.. Why can't the Federal Government?

  • Report this Comment On February 12, 2014, at 10:21 PM, irvingfisher wrote:

    lousy obama cutting spending and such. I want a bigger tax break on my mortgage, and more tax avoidance by multinationals!

  • Report this Comment On February 12, 2014, at 10:25 PM, shnafoo wrote:

    It is a good thing for governments to run permanent counter-cyclical deficits. Check out the UK and their austerity. They are getting crushed.

    Plus, most of the US debt is owned by the Fed, Social Security, and Americans, so we owe it to ourselves...

  • Report this Comment On February 12, 2014, at 10:30 PM, malclave wrote:

    So budget deficits are dropping now that Democrats don't control both houses of Congress plus the White House?

  • Report this Comment On February 13, 2014, at 5:35 AM, vietpdx wrote:

    how about budget deficits are dropping because more people are working so they aren't using unemployment, PLUS they are paying more in taxes. So its a double positive, as opposed to when we were in recession when revenues were down due to people getting laid off, made worse by the fact that said people then went on unemployment, further burdening the gov't.

    As much as we like to ascribe it to politicians, this is nothing obama has really done, for better or worse.

    I

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