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U.S. deficit nearly 24 percent lower than year ago

WASHINGTON — The U.S. government is running a deficit that is 23.6 percent lower than in the same period a year ago through the first five months of this budget year, another sign of improvement in the nation’s finances.

In its monthly budget report, the Treasury Department said Thursday that the deficit for February totaled $193.5 billion, the largest monthly imbalance in a year. The government traditionally runs large deficits in February, a month when it is sending out tax refund payments.

For the period from October through February, the deficit totals $377.4 billion, down from $493.95 billion a year ago.

Last week, President Barack Obama sent Congress a new budget that projects the deficit will fall to $649 billion this year, down from a $680 billion deficit last year.

The Congressional Budget Office is forecasting an even lower deficit this year of $514 billion. Both the administration and the CBO expect the deficit to improve as an improving economy boosts tax revenues and lowers spending on such government support programs as unemployment benefits.

The deficit is also being trimmed by tighter spending restraints imposed in response to four straight years in which the deficit soared above $1 trillion annually.

Through the first five months of this budget year, which begins on Oct. 1, government receipts totaled $1.1 trillion, 9.3 percent higher than the same period a year ago. Outlays totaled $1.48 trillion, 1.5 percent lower than a year ago.

The CBO is forecasting that the deficit will fall further to $478 billion in 2015. But it sees deficits rising after that, climbing above $1 trillion again in 2022 and 2023. The deficits will be pushed higher by rising spending on the government’s big benefit programs including Social Security and Medicare, as baby boomers retire.

Republicans attacked Obama for failing in his new budget to put forth significant changes to deal with the soaring entitlement costs. Obama did offer a major proposal last year, reducing the cost-of-living increases paid to Social Security recipients, but he made that offer on condition that Republicans agree to increase taxes on the wealthy.

In his new budget, Obama did not include a proposal to trim cost-of-living increases, saying he would not offer that again until Republicans showed flexibility on higher taxes for the wealthy.

Obama’s budget, which proposes spending $3.9 trillion in the budget year that begins Oct. 1, included many spending and tax proposals he has put forward before. It was met with heavy Republican criticism for spending too much and failing to do enough to tackle the country’s long-term deficit problems.

However, the expectation is that the budget wars of the past three years may subside this year following an agreement reached last December on the broad outlines for spending for the next two years.

That will allow Washington to avoid the contentious showdowns that culminated in a 16-day partial government shutdown last October.

The cease-fire in the budget wars also includes legislation Obama signed into law last month that will suspend the government’s borrowing limit through March 15 of next year, putting off another battle over raising the debt limit until a new Congress is elected next November and takes office next January.