Jan. 12 (Bloomberg) -- The U.S. government’s budget deficit widened 10 percent in December as spending rose more quickly than tax revenue.
The gap expanded to $86 billion, above the median forecast of economists surveyed by Bloomberg News, from a $78.1 billion shortfall in December 2010, according to Treasury Department data released today in Washington.
“We are seeing disappointing receipt growth because of a weak economy, which is unfortunate from a business cycle standpoint but also bad news for the Treasury,” Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report. “The slower economy, weakening receipts and a wider federal budget deficit means that there is pressure to cut spending even further.”
President Barack Obama will revive last year’s deficit reduction proposals and call for tax increases on the wealthy and incentives to create jobs in the 2013 budget plan he’ll send to Congress next month, administration officials said yesterday. The effort is intended to demonstrate the administration’s intent to chip away at the deficit, which hit $1.3 trillion in the fiscal year ended Sept. 30.
Before today’s report, a survey of 27 economists by Bloomberg News forecast that the December budget deficit would widen to $83.7 billion. Estimates ranged from a gap of $68 billion to $110 billion.
So far in the fiscal year that began in October, the budget deficit is $321.7 billion compared with $369 billion in the same period last year.
Spending rose by 3.5 percent in December from a year earlier to $326 billion, while revenue rose 1.3 percent from a year earlier to $240 billion.
Individual income tax receipts in the first three months of this fiscal year rose 5.6 percent to $270.4 billion. Corporate income tax receipts rose 55 percent to $55.6 billion in the first three months of the fiscal year.
The non-partisan Congressional Budget Office estimated this week the December budget deficit would reach $84 billion.
“Net payments to Fannie Mae and Freddie Mac climbed by $11 billion because the housing agencies required significantly larger cash infusions from the federal government than they did in December 2010,” the CBO said. “Spending increased by smaller amounts in several other areas.”
--With assistance from Roger Runningen in Washington. Editors: Kevin Costelloe, Carlos Torres
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