October 12, 2012 / 7:21 PM / 7 years ago

Budget deficit tops $1 trillion for fourth straight year

WASHINGTON (Reuters) - The United States government reported a budget surplus for the final month of the 2012 fiscal year, but the tiny bump in revenues did not prevent the country’s deficit from exceeding $1 trillion for the fourth year in a row.

The 2012 budget gap was $1.089 trillion, narrower than last year’s deficit of $1.297 trillion because of higher corporate income tax receipts and less spending, the Treasury Department said on Friday.

The deficit equaled 7.0 percent of U.S. economic output, down from 8.7 percent last year, the department said. Economists generally consider deficits exceeding 3.0 percent of gross domestic product to be unsustainable in the long term.

The year-end budget report comes in the final weeks of the presidential election campaign, where the massive budget gap and President Barack Obama’s economic policies have dominated the debate.

After the budget data was released, Obama’s Republican challenger Mitt Romney reiterated criticisms that the Democratic administration’s reckless spending has racked up the deficit and pushed the national debt over $16 trillion.

Obama and his Democrats have said spending was necessary to pull the economy out of the recession they inherited from the previous Republican administration.

The Obama administration spent $3.538 trillion in the 2012 fiscal year, 1.7 percent less than last year due to the expiration of stimulus provisions, a stronger economy, the end of military operations in Iraq and the continued drawdown in Afghanistan, the Treasury said.

Payments for the Obama administration’s troubled housing foreclosure prevention programs fell as well as payments to the government-controlled mortgage financiers Fannie Mae and Freddie Mac. The administration’s stock sale of bailed-out insurer AIG also helped reduce overall outlays.

Strong tax collections from Americans and businesses pushed receipts up to $2.449 trillion in 2012, up 6.4 percent from last year, according to the Treasury Department.

“We are seeing the stimulus spending fading and we are seeing some of the effects of the investment incentives,” said Lou Crandall, chief economist with Wrightson ICAP.

The government posted a September budget surplus of $75 billion mostly because monthly benefit payments were made in August due to a holiday weekend. That surplus topped analyst expectations for a surplus of $42 billion and marked only the second month in the fiscal year ended September 30 that the country was in the black.

Additional reporting by David Lawder, editing by Andrea Ricci

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