WASHINGTON – The federal government recorded a budget deficit in January only slightly larger than a year ago. For the first five months of this budget year, the deficit is running below the pace set last year.
The Treasury Department says the deficit in January totalled $192.6 billion, up 0.1 per cent from a year ago. So far this budget year, the deficit stands at $353 billion, down 8.7 per cent from the same period in 2015.
That improvement is not expected to last.
Both the Obama administration and the Congressional Budget Office are forecasting deficits for the full year that will be significantly higher than last year’s $439.1 billion deficit, the lowest annual deficit in eight years.
The CBO sees the deficit climbing by 24 per cent to $544 billion this year. The administration is even more pessimistic, forecasting the deficit will climb to $616 billion this year.
In December, Congress approved a budget package that increased spending by $1.14 trillion this year and will provide $680 billion in tax cuts over the coming decade. The agreement was part of a compromise between Republicans and the Obama administration.
The measured included many of the domestic spending increases that President Barack Obama and Democrats in Congress had been seeking. Meanwhile, Republicans won greater funding for the military and permanent tax cuts for business investment.
Both CBO and the administration see the deficit worsening over the next decade, driven higher by rising costs for Social Security and Medicare, which will come under pressure as millions of baby boomers retire.
For the current 2016 budget year, which began on Oct. 1, the government has collected $1.25 trillion in revenue, an increase of 5.3 per cent from a year ago. Government spending has totalled $1.6 trillion, up 1.9 per cent from a year ago.