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

U.S. June Budget Deficit Widens on 9.3% Spending Increase
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. Photographer: Ron Sachs/Pool via Bloomberg

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.

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