WASHINGTON — The U.S. government’s budget deficit widened in October, the first month of the new fiscal year, as President Barack Obama and Congress seek an agreement to lower future gaps and avoid the “fiscal cliff.”

The deficit expanded 22 percent to $120 billion from a $98.5 billion shortfall in October 2011, the Treasury Department said Tuesday in Washington. The gap exceeded the $113 billion median estimate in a Bloomberg survey of economists.

“The October miss from forecast was small relative to annual figures and the uncertainty with the fiscal cliff debate,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colo. Outlays for defense were more than expected in October, which could be because of a “spend before the cliff effect,” he said.

Obama has invited leaders in Congress for talks on a deal to reduce budget deficits that would avert the $607 billion in automatic spending cuts and tax increases scheduled to take effect Jan. 1. The Congressional Budget Office has forecast that the fiscal cliff would push the economy into a recession next year.

The wider October deficit was due to a shift in payment dates in the same month in 2011, which led to lower outlays in the year-ago period, the Treasury said. Lower corporate taxes also contributed to the expanded deficit last month.

“We still have fiscal policy run amok,” Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, said before the report was released. “We need to implement the fiscal policy that lowers the growth trajectory of outlays and raises the growth trajectory of revenues.”

The automatic reduction in spending including defense, paired with increases in tax rates including those on income, capital gains and dividends, would probably boost the unemployment rate to 9.1 percent in the fourth quarter of 2013, the nonpartisan budget office projected.

Tuesday’s report showed revenue increased 13 percent in October to $184.3 billion, compared with $163.1 billion in the same month a year earlier. Spending jumped 16.4 percent to $304.3 billion from $261.5 billion, the Treasury said.

Individual income-tax receipts in October rose to $102 billion from $86.7 billion in the same period last year. Corporate income-tax receipts fell to $1.62 billion from $2.47 billion.

Estimates of the October budget gap in the Bloomberg survey of 29 economists ranged from $129 billion to $110 billion.

Absent the automatic spending cuts and most of the tax increases set to take effect next year, the deficit would grow to $1.04 trillion in fiscal year 2013, the fifth-consecutive year of budget gaps exceeding $1 trillion, according to the budget office. The budget deficit was $1.09 trillion in fiscal 2012, the fourth-largest since World War II.

If the economy goes over the fiscal cliff, this year’s deficit would shrink to $641 billion, according to the Congressional Budget Office. But the budget office also warns that the economy would sink into recession in the first half of 2013.

Obama, who plans to reduce the shortfalls by increasing taxes for top earners, is holding meetings with labor and business leaders in the White House this week. The talks are intended to shore up the support for his plan before discussions Friday with House Speaker John Boehner, Senate Minority Leader Mitch McConnell, House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid.

While Obama said last week’s elections showed voters back his proposal, Boehner cited public support for the re-elected House Republican majority and said that tax rates must not go up. Both sides have left room for a compromise that would curtail tax breaks to pay for preserving current rates.

The government has run annual deficits for more than a decade and hit a record $1.41 trillion in 2009, Obama’s first year in office. That was largely because of the worst recession since the Great Depression. Tax revenue plummeted during the downturn, while the government spent more on stimulus programs.

P resident George W. Bush also ran annual deficits through most of his two terms in office after he won approval for broad tax cuts and ran wars in Afghanistan and Iraq.

The last time the government ran an annual surplus was in 2001.

One of the biggest challenges for the federal budget is the aging of the baby boom generation. That is raising government spending on Social Security and on Medicare and Medicaid. At the same time, the fragile economy, along with tax cuts, has reduced government revenue.

The national debt most likely will hit the $16.4 trillion limit at the end of December, with extraordinary measures enabling the U.S. to meet its obligations “until early in 2013,” the Treasury Department said on Oct. 31.

OBAMA COMMITMENT

Labor leaders said Tuesday that Obama remains committed to preserving tax cuts for middle-class families and ensuring high-earners pay more in taxes, outlining plans for a public campaign to pressure Republican lawmakers.

The heads of several labor unions and Democratic-leaning interest groups emerged from an hour-long meeting with Obama saying they were united with the president on how to avert the fiscal cliff and prevent more financial hardships next year.

“We are very, very committed to making sure that the middle class and workers don’t end up paying the tab for a party that we didn’t get to go to and the president is committed to that as well,” said AFL-CIO President Richard Trumka.

Labor leaders said they plan to mobilize their members in the coming weeks to press Republicans to support the extension of tax cuts for middle-income families.

One participant in the meeting, who spoke on condition of anonymity to discuss the private session, said the president told the group that he was not going to bend on letting tax cuts expire for top wage earners. The president said that the tax issue was clear during the election and that he had extended the Bush-era tax cuts once and would not do so again, the participant said.

According to participants, White House aides said the president intends to hold campaign-style events across the country after Thanksgiving to drum up support for his proposed solution to the fiscal cliff. It would build upon more than 100 rallies organized by labor unions last week urging members of Congress to avoid cuts to entitlement programs.

The labor and liberal organizations said they made clear their opposition to any benefit cuts to Medicare recipients or increasing the eligibility age.

‘COLD, HARD LOOK’

Meanwhile, Treasury Secretary Timothy Geithner said it will be necessary to raise personal income-tax rates on the highest-earning Americans to reduce long-term budget deficits because capping deductions won’t raise enough revenue.

Obama is “not prepared to extend the upper-income tax cuts,” Geithner said Tuesday at The Wall Street Journal’s CEO Council meeting in Washington. “There’s obviously universal support for the middle-class tax cuts. Doing that would remove the greatest source of anxiety and much of the greatest risk in the fiscal cliff.”

Geithner said that “when you take a cold, hard look at the amount of resources you can raise from that top 2 percent of Americans through limiting deductions, you will find yourself disappointed relative to the magnitude of the revenue increases that we need.”

Sen. Orrin Hatch, a Utah Republican, said in an interview Tuesday that higher tax rates are “not going to be” part of any deal.

Kent Conrad, a North Dakota Democrat and chairman of the Senate Budget Committee, disagreed. “If you’re going to meet the progressivity test, if you’re going to raise the revenue, it can’t just be loophole closings,” he said in an interview.

Boehner said last week that “shoring up entitlements and reforming the tax code — closing special-interest loopholes and deductions, and moving to a fairer, simpler system — will bring jobs home and result in a stronger, healthier economy.”

Obama on Friday reiterated his call for Congress to pass an immediate extension of existing tax rates for middle-income Americans and to let rates rise to 39.6 percent from 35 percent for individuals with income of about $200,000 annually and married couples earning more than $250,000.

Information for this article was contributed by Kasia Klimasinska, Meera Louis, Ian Katz and Heidi Przybyla of Bloomberg News and by Martin Crutsinger, Ken Thomas, Sam Hananel and Jim Kuhnhenn of The Associated Press.

Front Section, Pages 1 on 11/14/2012