Ahead of the Bell: US budget deficit

US budget deficit expected to shrink in May compared to year ago

Associated Press
US budget deficit drops to $82.4 billion in May
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FILE - In this May 19, 2015, file photo, Treasury Secretary Jacob Lew, accompanied by Federal Reserve Chair Janet Yellen, speaks during a Financial Stability Oversight Council meeting at the Treasury Department in Washington. The Treasury Department releases federal budget data for May on Wednesday, June 10, 2015. (AP Photo/Andrew Harnik, File)

WASHINGTON (AP) -- The Treasury Department releases federal budget data for May at 2 p.m. Eastern Wednesday.

LOWER DEFICIT: The forecast from the Congressional Budget Office is that the deficit for May will drop to $85 billion, an improvement from a deficit of $130 billion in May 2014.

SMALLER IMBALANCE: In April, a flood of tax payments pushed government receipts to an all-time high and left the country with the largest budget surplus in seven years. From October through April, the deficit has totaled $282.8 billion, 7.7 percent below the level during the same period in the 2014 budget year.

The CBO is forecasting that the deficit for the full year will total $486 billion, roughly the same as last year's deficit of $483.4 billion.

The 2014 deficit fell from $680.2 billion in 2013. Before then, the U.S. had recorded four straight years of annual deficits topping $1 trillion. That reflected the impact of a severe financial crisis and the worst recession since the Great Depression of the 1930s.

In the budget plan President Barack Obama unveiled for 2016, his final full year in office, the president is seeking authorization from Congress to spend $4 trillion and is projecting a deficit of $474 billion.

Obama's budget plan would boost spending on domestic and military programs and seek to raise taxes by $2 trillion by raising levies on the wealthy, corporations and smokers.

Republicans have attacked Obama's proposed tax increases and the fact that under Obama's spending plans, the budget will never reach balance. A GOP budget which cleared Congress last month seeks to balance the government's books over the next decade. It would cut spending on domestic programs and government benefits like Medicaid and food stamps.

Democrats have charged that the GOP budget only balances on paper because Republican lawmakers will balk at approving the follow-up legislation that would enact the painful cuts needed to achieve balance without raising taxes.

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