WASHINGTON — The federal government started the budget year with a smaller October deficit than a year ago, modest progress after three straight years of $1 trillion-plus deficits.
The deficit for October, the first month of the 2012 budget year, totaled $98.5 billion, the Treasury Department said Thursday. That’s down from $140.4 billion in October 2010.
Even with the improvement, the deficit remains extraordinarily high by historical standards and will keep pressure on lawmakers as they debate spending cuts and tax increases.
For all of the 2012 budget year, the Congressional Budget Office predicts the deficit will be $973 billion. That’s lower than the $1.3 trillion imbalance from the budget year that just ended on Sept. 30, the second highest ever. But it would still be higher than any previous deficit before fiscal year 2009.
The government ran an all-time record deficit of $1.41 trillion in 2009, and a $1.29 trillion imbalance in 2010.
The CBO’s lower projected deficit for this year is based on an expectation that revenues, helped by a slowly improving economy, will outpace the growth in government spending.
Still, a big reason for the smaller October deficit was an accounting shift. Roughly $31 billion in benefit payments for October went out in late September. Federal benefits are paid on the first day of the month. But because Oct. 1 fell on a Saturday, the payments went out a day earlier and were accounted for in last year’s deficit.
A decade ago, the government was running surpluses and trillion-dollar deficits seemed unimaginable. Now, the nation’s debt is $14.9 trillion.
The enormity of that figure has stoked intense partisan debate in Congress over spending and taxes. Polls show growing voter anger with the inability of both parties to reach solutions to the country’s budget problems.
Lawmakers are under pressure to agree by Thanksgiving on where they can cut $1.2 trillion over the next decade. If they cannot, automatic cuts to Medicare, defense spending and other critical areas of the budget would go into effect in January 2013.
The committee is evenly split between Democrats and Republicans. With just two weeks to go before the committee’s Thanksgiving deadline, the two sides are far apart on how much in new tax revenues a deal should include.