Reuters AlertNet Lite - US FY07 budget deficit running behind previous year

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US FY07 budget deficit running behind previous year

09 Jan 2007 16:00:14 GMT
Source: Reuters

WASHINGTON, Jan 9 (Reuters) - The U.S. budget deficit for the fiscal year that began on Oct. 1 is running significantly below the previous year's pace amid a continued rise in revenues, the nonpartisan Congressional Budget Office said.

In a monthly budget review released late on Monday, the congressional budget analysis agency said the deficit was about $85 billion in the first quarter of fiscal 2007, about $35 billion less than the same period of fiscal 2006.

"Revenues have risen by 8 percent compared with their level in the first three months of 2006, substantially outpacing the one percent growth in outlays," the CBO said.

Receipts for the first three months of fiscal 2007 totaled $573 billion, up $43 billion from the previous year, CBO said.

Corporate income tax receipts grew by about $18 billion, or 22 percent, in the first quarter of this fiscal year, CBO said. Receipts from individuals in the first quarter rose to $251 billion, up 8.8 percent, according to early CBO figures.

While federal war-time spending on defense was up more than 10 percent from the previous year's pace, CBO noted the fiscal situation was aided by slower spending on Gulf Coast hurricane rebuilding and the receipt of $12.7 billion from a 2006 auction of broadcast spectrum licenses.

House Budget Committee Chairman John Spratt, a South Carolina Democrat, said that much of the improvement in this year's deficit trajectory "is a result of two factors that will not be repeated."

Spratt said that while the short-term improvement is "welcome," he added there remains a "bleak long-term budget outlook."

Next month, Republican President George W. Bush is expected to ask the new Democratic-led Congress for new "emergency" funds to fight the wars in Iraq and Afghanistan this year, which could total around $100 billion, contributing to deficit woes.

The fiscal 2006 deficit totaled $247.7 billion. Last summer, CBO provided an early forecast of the fiscal 2007 budget deficit of about $286 billion. Later this month, CBO is scheduled to issue new budget projections for fiscal 2007 and the following 10 years.

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Last updated:Tue Jan 9 16:00:36 2007