U.S. budget deficit trimmed to $80 billion last month

U.S. budget deficit trimmed to $80 billion last month

The budget deficit declined 12.4 percent to $80 billion in December compared to the same month a year ago, a report by the Treasury Department showed Wednesday. But the total deficit for the year is still expected to top $1 trillion.

For the initial three months of the present fiscal year the budget deficit is at $370.8 billion, down 3.1 percent compared to the same period one year ago. Analysts are hoping the tax cuts legislation in December will widen the deficit yet help stir economic activity.

The tax measure extended Bush-era tax cuts for an additional two years. It also allowed accelerated tax breaks for businesses for equipment purchases and a one-year decrease in Social Security taxes for individuals. The $858 billion tax package will count towards the budget deficit for the next couple of years.

Government receipts jumped 9 percent higher to $531.8 billion year-on-year as more taxes were collected from individuals and businesses. Overall spending rose 3.1 percent to $902.6 billion from a year ago.

In 2009, the budget deficit hit its highest mark ever with $1.41 trillion. It dipped to $1.29 trillion last year. Federal spending ballooned over the said period because of efforts to ease the effects of the recession and spur economic growth.

Meanwhile, Treasury Secretary Timothy Geithner urged lawmakers to set a new debt ceiling soon to avoid defaulting on obligations. The present debt ceiling is set at $14.3 trillion which will be reached sometime between March 31 and May 16 according to Geithner.

Posted by James Fried on Thursday January 13 2011, 1:20 AM EDT. Ref: AP. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0