Ahead of the Bell: Budget Deficit

WASHINGTON (AP) — The federal budget deficit is on track to top $1 trillion for a fourth straight year even though the imbalance is running slightly below last year's deficit.

In April, the government took in more money than it spent for the first time in nearly four years. But for the budget year, the deficit remains on track to top $1 trillion for a fourth straight year — a trend that should keep the deficit near the center of the presidential race.

The Treasury Department will release the May report at 2 p.m. Eastern time Tuesday.

The Congressional Budget Office expects the May deficit will total $125 billion, pushing the deficit through the first eight months of the budget year to $845 billion.

That would represent an improvement of $82 billion, or 8.8 percent, from the imbalance during the same period a year ago.

The CBO is forecasting that the 2012 budget year, which ends Sept. 30, will total $1.17 trillion, a slight improvement from the $1.3 trillion deficit recorded in 2011.

Obama submitted a budget to Congress in February that calls for $4 trillion in deficit reduction over the next decade through a combination of spending cuts and tax hikes on the wealthy.

Republicans have rejected the tax increases and want deeper cuts in government programs. The GOP-controlled House has approved a budget that calls for deep cuts in Medicare and other programs and a new round of tax cuts that would favor wealthy Americans.

The House-approved spending plan has no chance of winning approval in the Senate, where Democrats hold a slim majority. That sets the stage for gridlock until after the November elections when lawmakers will be faced with a number of end-of-the-year deadlines.

Mitt Romney, the presumptive Republican presidential nominee, has proposed broad but largely unspecified spending cuts. Romney also wants to cut taxes further.

The Bush-era tax cuts for all Americans are scheduled to expire at the end of December. In addition, a set of automatic spending cuts totaling about $1.2 trillion over 10 years are scheduled to kick in. Both parties oppose the automatic spending reductions because they include deep cuts in defense.

However, they have been unable to reach an agreement so far on alternate spending cuts or tax increases that would prevent the automatic to keep the automatic cuts from taking effect.

The government last recorded a budget surplus in 2001. Deficits returned after President George W. Bush won approval for broad tax cuts, pushed a major drug benefit program for seniors and launched wars in Afghanistan and Iraq.

The deficit grew further under Obama as the Great Recession shrank tax revenue as unemployment rose and income fell. The deficits have topped $1 trillion in each of Obama's first three years in office.