The federal government is on pace to run a deficit below $1 trillion for the first time in four years, modest progress in the face of intense debate in Washington over spending. The Treasury Department said Monday that the deficit was $137 billion in October. That brings the total for the first two months of the budget year to $236 billion — $55 billion less than the same two months last year.
Still, part of the reason for the lower deficit is an accounting quirk.
And the government is on pace to end the year $973 billion in the red, according to the Congressional Budget Office. While that's lower than last year's $1.3 trillion imbalance, 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 estimate does not include an extension of the Social Security tax cut and emergency unemployment benefits. Congress is likely to extend both before they expire at the end of the year. That could push the deficit back above $1 trillion if those programs aren't offset. The two programs are estimated to cost around $200 billion.
A big reason the first two months are lower than last year is 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.
Through the first two months of this budget year, government spending totals $551.2 billion. That's down 5.8 percent from a year ago, by mostly reflects the benefit shift. Government revenues total $315.5 billion. That's up 4.7 percent from a year ago. Net interest payments on the government debt continued to be one of the fastest rising categories of government spending. They totaled $44 billion in October and November, up 19.5 percent from the same period a year ago.
A decade ago, the government was running surpluses and trillion-dollar deficits seemed unimaginable. Now, the nation's public debt is $15 trillion and rising and polls show growing voter anger with the inability of both parties to reach solutions to the country's budget problems.
A special 12-member committee was unable to reach agreement on at least $1.2 trillion in deficit reduction by a November deadline. That means automatic cuts of that amount will begin on Jan. 1, 2013.
Republicans want to modify the timetable for the automatic cuts, largely because it includes steep cuts to the defense budget.
Click here for the CBO's infographic.