Ahead of the Bell: US budget deficit
WASHINGTON (AP) — The Treasury reports how much of a budget deficit the U.S. government ran in January. The report will be released at 2 p.m. EST Wednesday.
SMALL DEFICIT: The Congressional Budget Office forecasts that the January deficit will total $10 billion and the imbalance for the first four months of the budget year will be $184 billion.
SHRINKING IMBALANCES: The CBO is projecting that the deficit for the current budget year will decline to shrink to $514 billion. That would be an improvement of 24 percent over the 2013 imbalance of $680.3 billion. It would be the smallest deficit since 2008.
The deficit hit an all-time high of $1.4 trillion in 2009, surpassing the old mark of $458.6 billion set 2008. The deficits remained above $1 trillion for four straight years as a deep recession and weak recovery pinched government revenues and forced higher spending for such programs as food stamps and unemployment benefits.
The CBO earlier this month forecast that the deficit will decline to $478 billion in 2015 before starting to rise again in 2016 and keep heading higher for the rest of the decade, topping $1 trillion again in 2022. The increases would reflect the retirement of the baby boom generation, which will push up spending on Social Security and Medicare.
The economy has gradually improved since the recession ended in June 2009. As more people find jobs, tax revenue rises and the deficit shrinks.
Through December, government receipts were up 8 percent compared to the same period a year ago while outlays were down 7.8 percent, resulting in a deficit running 40.8 percent below a year ago.
A $40 billion quarterly payment from Fannie Mae and Freddie Mac helped boost December to a $53.2 billion surplus. An improving housing market is allowing the companies to repay their taxpayer assistance after being rescued by the government in September 2008. The companies make those payments at the end of each quarter.
Congress reached agreement in December on a budget deal aimed at bringing some stability to the budget process for the next two years. A battle over the budget resulted in a 16-day partial government shutdown in October.
And on Tuesday, the House passed legislation to suspend the debt ceiling until March of next year. If the Senate goes along as expected, that will eliminate another potential flashpoint in the budget wars.
The House vote came after Treasury Secretary Jacob Lew began taking extraordinary measures to avoid breaching the current $17.2 trillion debt limit. Lew had warned that Congress would only have until the end of this month to approve a new debt ceiling and avert a market-rattling default on the debt.
Many House Republicans wanted to use the need to increase the debt ceiling to extract budget concessions from the Obama administration. However, they backed away from that battle after GOP lawmakers were unable to agree on what concession to demand from Democrats. The White House had insisted that President Barack Obama would not negotiate over the debt limit.
The 221-201 House vote on Tuesday came just hours after House Speaker John Boehner announced that his party was relenting on the issue.