US federal budget deficit improves greatly

The federal deficit has improved significantly in the first three months of the new budget year, helped by a continued surge in tax revenues.

Photo: US federal budget deficit improves greatly

In its monthly budget report, the Treasury Department said Friday that the deficit from October through December totaled $80.4 billion (EUR 62.36 billion), the smallest imbalance for the first three months of a budget year since 2002. The budget year ends Sept. 30.

Tax collections are running 8.2 percent higher than a year ago while government spending is up by just 0.7 percent from a year ago. Last year's spending totals were boosted by significant payments to help the victims of the Gulf Coast hurricanes.

The Treasury said for December, the government actually ran a surplus of $44.5 billion (EUR 34.51 billion), the largest surplus ever recorded in December and a gain that reflected a big jump in quarterly corporate tax payments.

The $80.4 billion (EUR 62.36 billion) deficit for the first three months of the current budget year was down 32.6 percent from the imbalance for the same period a year ago of $119.4 billion (EUR 92.61 billion).

For the year, analysts are still forecasting that the deficit will worsen from last year's total of $248.2 billion (EUR 192.51 billion), which had been the lowest in four years.

The Congressional Budget Office is forecasting that the deficit for the 2007 budget year will rise to $286 billion (EUR 221.83 billion), an increase of 15.2 percent from last year, but that figure could be lowered when the CBO releases its revised estimate later this month.

The Bush administration is currently even more pessimistic, predicting a deficit for 2007 of $339.2 billion (EUR 263.09 billion), but that figure will also be revised when the administration releases its new budget request to Congress on Feb. 5.

Bush, who took office while the country was running record surpluses, saw the deficit hit an all-time high in dollar terms of $413 billion (EUR 320.33 billion) in 2004.

President George W. Bush has said his new budget will outline a path to eliminate the deficit completely by 2012, the AP reports.

For the first three months of the current budget year, revenues total $573.5 billion (EUR 444.82 billion), an increase of 8.2 percent from tax collections in the same period a year ago. Outlays totaled $653.9 billion (EUR 507.17 billion), up 0.7 percent from a year ago.