The U.S. government’s monthly budget deficit narrowed to $40.5 billion in April from a year earlier as tax revenue climbed.
Last month’s figure compares with a shortfall of $82.7 billion in April 2010, according to the Treasury Department’s monthly budget statement, released today in Washington.
The White House and Congress are struggling to rein in the budget deficit and agree to terms to raise a legal limit on the national debt. Without an increase in the debt cap, the Treasury’s borrowing authority will probably run out in early August, according to official estimates.
“We have seen income tax increases start to trend higher,” said Sean Incremona, a senior economist at 4Cast Inc in New York. “There is an underlying positive trend.” Incremona forecast a deficit of $41 billion.
This year’s federal budget deficit is projected to reach $1.5 trillion, or 9.8 percent of gross domestic product, according to the Congressional Budget Office. During fiscal 2009, the government, under the administration of President George W. Bush, reported the previous record deficit of $1.4 trillion.
For the fiscal year to date, the deficit totaled $869.9 billion, compared with $799.7 billion in the same period last year. The fiscal year runs from Oct. 1 to Sept. 30.
During fiscal 2010, the government reported a shortfall of $1.3 trillion, the second-largest on record. By comparison, the budget reached a record surplus of almost $237 billion in fiscal 2000, highlighting the deterioration in the nation’s finances.
A survey of 25 economists by Bloomberg News projected the deficit would shrink to $41 billion in April. Forecasts ranged from $35 billion to $80 billion.
The non-partisan CBO, in a forecast issued May 9, estimated the March deficit would total $41 billion.
“Through April, individual income tax receipts were $130 billion (or 26 percent) more than those during the same period last year -- the result of increased amounts withheld from paychecks and strong growth in payments accompanying 2010 tax returns,” the agency said in a statement.
The Treasury’s report showed that government spending rose 0.6 percent in April to $330 billion, and revenue increased 18 percent to $289.5 billion.
Individual income tax receipts rose 26 percent to $631.2 billion in the fiscal year to date. Corporate income taxes climbed 3.9 percent.
This week, the Treasury is selling $72 billion of long-term debt, and officials said they anticipate auction sizes will “remain steady” throughout the quarter as negotiations continue on the debt limit.
The Treasury can borrow until Aug. 2 after reaching the $14.3-trillion limit because of stronger-than-expected tax receipts and by taking “extraordinary measures” such as suspending the sale of bonds to finance state and local infrastructure projects, Treasury Secretary Timothy F. Geithner said in a letter to congressional leaders.
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