U.S. June Budget Deficit Widens on 9.3% Spending Increase

Photographer: Ron Sachs/Pool via Bloomberg

President Barack Obama in Washington criticized Mitt Romney by name and mocked the former Massachusetts governor for describing as "marvelous" the U.S. House-passed budget that overhauls Medicare and cuts domestic programs while lowering taxes for high earners. Close

President Barack Obama in Washington criticized Mitt Romney by name and mocked the... Read More

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Photographer: Ron Sachs/Pool via Bloomberg

President Barack Obama in Washington criticized Mitt Romney by name and mocked the former Massachusetts governor for describing as "marvelous" the U.S. House-passed budget that overhauls Medicare and cuts domestic programs while lowering taxes for high earners.

The U.S. government’s budget deficit widened in June, as spending jumped 9.3 percent from the same month a year ago.

The deficit expanded 38.7 percent to $59.7 billion from a $43.1 billion shortfall in June 2011, the Treasury Department said today in Washington. The gap matches the projected $60 billion deficit, according to the median estimate in a Bloomberg News survey. For the first nine months of this fiscal year the deficit was 6.8 percent narrower than in the year-earlier period.

“The budget deficit is bad, but it is not as bad as the June figures suggest,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said by e-mail before today’s report. “July social security benefits went out early in June due to the July 4 holiday, which boosted outlays, and next month’s deficit will be underreported as a result.”

Revenue rose by 4.2 percent in June from the same month a year earlier to $260.2 billion from $249.7 billion, and spending rose to $319.9 billion from $292.7 billion.

Estimates of the June budget gap ranged from $80 billion to $37 billion in the Bloomberg survey of 22 economists.

In the first nine months of the fiscal year that began in October, the budget deficit narrowed to $904.2 billion from $970.5 billion in the same period last year.

Tax Receipts

Individual income tax receipts in the first nine months of this fiscal year rose 3.1 percent to $840.5 billion from $814.9 billion in the same period last year. Corporate income tax receipts rose 31 percent to $175.9 billion from $134.3 billion.

If Congress does nothing on tax cuts championed by former President George W. Bush, 82.9 percent of U.S. households would face tax increases averaging $3,701, according to the Tax Policy Center, a nonpartisan research group in Washington. More than 98 percent of households earning more than $50,000 a year would pay higher taxes.

The Congressional Budget Office estimated this week the June deficit would be $60 billion. The CBO said in a report dated July 9 that spending was influenced by the shift of certain payments from July to June.

“If not for those timing shifts, the deficit in June 2012 would have been $19 billion less than the shortfall in June 2011,” the non-partisan CBO said July 9.

To contact the reporters on this story: Meera Louis in Washington at mlouis1@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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