WASHINGTON Feb 7 The U.S. budget deficit for
January likely shrank to just $2 billion, the Congressional
Budget Office said on Thursday, leaving the Treasury Department
with ample capacity to stave off default after a debt limit
extension expires on May 19.
The small deficit, $26 billion less than the budget gap in
January 2012, means that the Treasury consumed very little of
the resources under the so-called extraordinary cash management
measures it can use to stay under the debt limit.
Treasury began deploying these measures, which include
dipping into federal employee pension funds, around Jan. 1 as it
reached the $16.4 trillion statutory debt limit.
Congress on Jan. 31 passed a measure that allows Treasury to
borrow sufficiently to meet federal obligations until May 19, at
which time another increase in the federal debt limit will be
But even if no increase is granted, Treasury will be able to
stave off a final day of reckoning until late July or early
August by redeploying its extraordinary cash management
measures. These measures allow it to claw back about $220
billion worth of borrowing capacity.
CBO said U.S. receipts were about $36 billion, or 15
percent, higher in January 2013 than a year earlier, partly as a
result of a $9 billion increase in payroll tax collections after
a temporary reduction had expired on Jan. 1.
Outlays were up $10 billion in January compared with a year
earlier, largely as the result of increased spending on the
Medicare and Medicaid healthcare programs and Social Security
For the first four months of fiscal 2013, which began on
Oct. 1, the nonpartisan budget referee agency estimated that the
Treasury will record a $295 billion deficit, about $54 billion
less than the shortfall for the same period a year earlier. Had
it not been for calendar shifts of benefit payments in the prior
fiscal year, the four-month deficit would have been $84 billion
The Treasury is expected to report its January budget data
on Feb. 12.
CBO earlier this week forecast that if Congress enacts no
further tax or spending legislation this year and allows full
implementation of automatic spending cuts on March 1, the
government will end fiscal 2013 with a deficit of $845 billion.
This would be the first deficit under $1 trillion since
President Barack Obama took office in 2009.