The U.S. government ran a $53.2 billion surplus in December, signaling further improvement in the nation's finances.
The U.S. government ran a $53.2 billion surplus in December, signaling further improvement in the nation’s finances.
The surplus was the largest since September and a record for the month of December, according to the Treasury Department report released Monday. It was boosted by nearly $40 billion in payments from mortgage giants Fannie Mae and Freddie Mac.
For the first three months of the budget year, which began on Oct. 1, the Treasury has run a deficit of $173.6 billion. That’s 40.8 percent below the $293.3 billion deficit run during the same period last year.
Rising tax revenues and government spending constraints are expected to trim this year’s annual deficit to around $600 billion. That would be even lower than last year’s deficit of $680 billion, which was the lowest since 2008.
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Annual deficits ballooned above $1 trillion from 2009 through 2012. They peaked at a record $1.4 trillion in 2009, President Barack Obama’s first year in office.
The Great Recession led to a drop in tax revenue. At the same time, the government stepped up emergency spending, including unemployment benefits for millions who lose their jobs during the downturn.
The economy has gradually improved since the recession ended in June 2009. As more people find jobs, tax revenue rises and the deficit shrinks.
So far this year, revenue has totaled $664.6 billion. That’s 8 percent higher than the first three months of the previous budget year. Outlays have fallen 7.8 percent to $838.2 billion.
The quarterly payment from Fannie and Freddie helped lift December’s surplus. An improving housing market is allowing the two companies to repay their taxpayer assistance after being rescued by the government in September 2008.
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.
The agreement sets overall discretionary spending for the current budget year at $1.012 trillion. That’s slightly higher than the level sought by the Republican-controlled house. But it is below what the Democrat-controlled Senate had wanted. The additional $45.5 billion in spending would be paid for by a range of measures, including a higher fee on airline tickets.
However, Congress is still battling over various aspects of the budget including whether to resurrect benefits for the long-term unemployed.
A program that provided long-term unemployment benefits averaging $256 a week for up to 47 weeks expired on Dec. 28. Democrats are offering a compromise that would restore benefits for up to 31 weeks. But Republicans have objected, saying any such measure should be paid for by cuts in other programs so that the deficit will not be increased.
Discretionary spending is roughly one-third of the federal budget and must be approved each year by Congress. The rest of the budget covers mandatory programs such as Social Security and Medicare. Those spending levels are determined by the number of qualified beneficiaries.