The U.S. government budget deficit narrowed to its best December monthly result in five years, reflecting higher revenue, lower spending and calendar-driven shifts in some payments.
The shortfall last month shrank almost completely to $260 million from $86 billion in December 2011, according to Treasury Department data issued today in Washington. The gap was smaller than the $1 billion median estimate in a Bloomberg survey of economists. Through the first three months of this fiscal year, the deficit was 9.1 percent smaller than the same period last year.
“We had a pretty solid month in December mostly because of quite a bit of tax-related activity that was shifted into December due to concerns over the fiscal cliff and anticipated higher tax rates in 2013,” said Thomas Simons, a government debt economist at Jefferies Group Inc. in New York. “Going forward we are still going to run fairly substantial deficits this year and in coming years without any significant change to the spending policy.”
The U.S. had a monthly budget surplus of $48.3 billion in December 2007.
The U.S. reached its $16.4 trillion debt limit on Dec. 31. Treasury Secretary Timothy Geithner said on Dec. 26 he could create about $200 billion of “headroom” to avoid possible default with the use of extraordinary measures.
The House of Representatives passed legislation averting income tax increases for most U.S. workers Jan. 1 after Republicans abandoned their effort to attach spending cuts that would have been rejected by the Senate. The 257-167 bipartisan vote broke a yearlong impasse over how to head off $600 billion in tax increases and spending cuts that had been scheduled to begin taking effect on Jan. 1.
While the measure averts most of the immediate pain, it is only a small step toward controlling the federal deficit -- an issue that will return with a looming fight over raising the debt limit.
Today’s report showed revenue rose 12.3 percent in December from the same month a year earlier, to $269.5 billion from $240 billion. Spending fell 17.2 percent to $269.8 billion from $325.9 billion.
Estimates for December ranged from a gap of $35 billion to an even balance for the month, according to the Bloomberg survey of 22 economists.
Individual income tax receipts in the first three months of this fiscal year rose to $312.4 billion from $270.4 billion in the same period last year. Corporate income tax receipts rose to $62.5 billion from $55.6 billion.
The Congressional Budget Office said Jan. 8 December would show a budget deficit of $1 billion.
The CBO said that receipts in December 2012 were about $30 billion more than the receipts in the same month the year before.
“In both years, spending was affected by a shift of certain payments from January to December -- because January 1 is a holiday -- but spending this December also was affected by a shift of certain payments into November,” the CBO said.
The CBO said there was a $24 billion increase in withheld taxes last month.
“ The strong growth in withheld taxes may be attributable in part to an acceleration in the payment of some compensation from calendar year 2013 to 2012 because people were anticipating higher tax rates,” the CBO said.