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Budget deficit totals $349B through first 4 months; on pace to pass $1T for 4th straight year
WASHINGTON (AP) ' The federal deficit was lower through the first four months of the budget year than the same period last year. Still, the deficit is expected to top $1 trillion for the fourth year in a row, putting more pressure on Congress and President Barack Obama in an election year.
The deficit totaled $349 billion through January, the Treasury Department said Friday. That's $70 billion less than at the same point last year. January's monthly deficit was $27 billion, down from $50 billion in January 2011.
Most of the drop was due to several accounting changes. The biggest resulted in some benefit payments being made in December rather than January.
Still, the Congressional Budget Office, a nonpartisan agency, forecast last week that the budget gap will be nearly $1.1 trillion in budget year 2012, which began Oct. 1. While lower than last year's $1.3 trillion imbalance, it would be higher than any previous deficit before fiscal year 2009.
The government ran an all-time record deficit of $1.41 trillion in fiscal 2009, and a $1.29 trillion imbalance in 2010.
This year's deficit is running lower because of higher corporate tax receipts, the department said. That has boosted government revenue to $790 billion from October through January.
Spending fell to $1.14 trillion in the same period, though excluding the accounting changes it was largely flat.
Still, the picture hasn't improved as much as the CBO had estimated it would last year. In August, the agency projected that the deficit would come in at $973 billion this year. But last week, it boosted its estimate, citing lower than expected tax revenues.
Congress has shown little ability recently to make difficult changes to tax levels or spending programs to reduce the deficit. They will face another big challenge at the end of this year, when tax cuts that were first enacted in 2001 and 2003 are set to expire. And a set of automatic spending cuts totaling about $1.2 trillion over 10 years is also scheduled to kick in.
Those changes, along with several other provisions that will automatically take effect under current law, would substantially reduce the deficit in future years.
But the CBO estimates that if Congress extends the tax cuts, as many observers expect, and if they block the spending cuts, the deficit will remain near $900 billion or higher for the next 10 years.
President Obama is set to release his annual budget proposal Monday. It will include a set of economic projections, including that unemployment will average 8.9 percent this year. White House officials dismissed the figure Thursday as outdated. The rate fell to 8.3 percent in January.