U.S. Oct-Dec budget deficit narrows sharply: CBO

WASHINGTON Wed Jan 8, 2014 5:52pm EST

Congressional Budget Office (CBO) Director Douglas Elmendorf speaks at a news conference to release the CBO's annual ''Budget and Economic Outlook'' report on Capitol Hill in Washington February 5, 2013. REUTERS/Yuri Gripas

Congressional Budget Office (CBO) Director Douglas Elmendorf speaks at a news conference to release the CBO's annual ''Budget and Economic Outlook'' report on Capitol Hill in Washington February 5, 2013.

Credit: Reuters/Yuri Gripas

WASHINGTON (Reuters) - The U.S. government's budget deficit fell by more than a third in the first three months of fiscal 2014 to $182 billion, including a $44 billion surplus in December, the Congressional Budget Office estimated on Wednesday.

The cumulative budget gap for October, November and December was $111 billion below the year-ago-period, continuing a trend of shrinking deficits due to an improving economy and higher tax collections.

Net revenues rose 7.7 percent, or $38 billion, in the October-December period, mostly because of higher social insurance taxes after a temporary reduction expired at the end of 2012, CBO said.

Outlays for the three-month period fell by 7 percent, or $62 billion, as military spending fell $11 billion, unemployment benefits fell $4 billion and net interest on the public debt fell by $7 billion.

Government controlled mortgage finance groups Fannie Mae and Freddie Mac also contributed $34 billion more to the Treasury than during the year-ago period as their net worth improved.

The $44 billion December surplus compares with a $1 billion deficit a year earlier, the CBO said, even though revenues in December 2012 benefited from stronger realization of income by wealthy individuals hoping to avoid tax increases in January 2013.

The U.S. Treasury Department is expected to report official budget figures for December and the first three months of the 2014 fiscal year on January 13.

(Reporting by David Lawder; Editing by Jonathan Oatis)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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