WASHINGTON — The U.S. government posted a January budget surplus for the first time in five years, reflecting higher revenue from payroll and individual income taxes.
Receipts exceeded outlays by $2.88 billion, compared with a $27.4 billion deficit in January 2012, according to Treasury Department data issued Tuesday in Washington. Economists projected a $2 billion shortfall, according to the median estimate in a Bloomberg survey. The nation had a $17.8 billion surplus in January 2008.
“Going forward, we are likely to see a dramatic improvement in the overall budget relative to the last year largely due to the improving economic performance,” said Millan Mulraine, senior U.S. strategist for TD Securities Inc. in New York.
Through the first four months of the 2013 budget year, the deficit has reached $290.4 billion. That’s nearly $60 billion lower than the same period a year ago.
The deficit is the amount the government must borrow when its expenses exceed its revenue. Each month’s deficit is volatile and can be affected by calendar quirks that shift government spending or revenue from one month to another.
The federal budget deficit will total $845 billion in fiscal 2013, the first time in five years the gap will be less than $1 trillion, reflecting a combination of budget cuts and economic growth, the Congressional Budget Office said Feb. 5.
The nonpartisan agency is projecting even smaller annual deficits of $616 billion in 2014 and $459 billion in 2015. But as more baby boomers retire and claim Medicare and Social Security, deficits would likely rise again. The implementation of the 2010 healthcare law would also widen deficits. The agency forecasts that deficits could near $1 trillion again by 2023.
The annual deficit is projected to be smaller this year because the government is collecting more revenue,mainly because of faster job growth and higher taxes.
At the same time, the government is spending less on some programs. That’s in part because of spending cuts thatwere enacted under a 2011 agreement to raise the federal borrowing limit. Also, the improved economy has reduced demand for unemployment benefits and some other government programs.
Last year, the economy grew at a modest 2.2 percent and generated an average of about 180,000 jobs a month. Stronger job growth is forecast for this year - an average of more than 200,000 a month, some economists say. More jobs mean more income, which generates more tax revenue for the government.
Another factor in a smaller expected deficit is higher taxes for some Americans this year. When Congress and the White House reached a deal in January to avert the fiscal cliff, they allowed taxes to rise on individuals earning at least $400,000 a year and couples earning $450,000. That is expected to raise $620 billion in revenue over the next decade.
Tuesday’s report showed revenue rose 16.2 percent in January from the same month a year earlier, to $272.2 billion from $234.3 billion. Spending increased 2.9 percent to $269.3 billion from $261.7 billion.
Individual income tax receipts in the first four months of this fiscal year, which started Oct. 1, climbed to $468.4 billion from $403.8 billion in the same period last year. Corporate income tax receipts rose to $70.3 billion from $60.2 billion.
President Barack Obama and Republicans are locked in a standoff over how to avert $1.2 trillion in automatic spending cuts set to take effect March 1 unless Congress acts to stop or replace them.
In addition, a temporary suspension of the nation’s $16.4 trillion debt ceiling only runs through May 18.
Consumers are grappling with an increase in the payroll tax, which Congress allowed to revert to its 2010 level of 6.2 percent from 4.2 percent starting in January. A worker earning $50,000 a year is taking home about $83 less a month because of thehigher levy.
On Thursday, the Congressional Budget Office projected January would show a budget deficit of $2 billion.
The agency said that receipts were about $36 billion higher in January than they were in the same month last year, “largely because revenues from individual income and payroll taxes increased by $33 billion.”
“Most significantly, the temporary cut in payroll taxes expired at the end of December 2012, boosting withheld receipts by about $9 billion,” the agency said.
Republicans and Obama agree on the need for a plan to contain the deficits. But they are at odds over the details. Republicans want to trim growth in Social Security and Medicare spending but oppose any further tax increases.
Obama has said he is willing to consider cuts in the growth of entitlement programs such as Medicare and Social Security. But he argues that a balanced approach will require further tax increases on the highest earners.
Obama’s presidency has coincided with four-straight $1 trillion-plus deficits.
The gaps reached a record $1.41 trillion in budget year 2009, which began four months before Obama took office. That deficit was due largely to the worst recession since the Great Depression. Tax revenue plummeted. And the government spent more on stimulus programs.
The budget gaps in 2010 and 2011 were slightly lower than the 2009 deficit as a gradually strengthening economy generated more tax revenue.
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 began wars in Afghanistan and Iraq.
The last time the government ran an annual surplus was in 2001.
Information for this article was contributed by Meera Louis of Bloomberg News and by Martin Crutsinger of The Associated Press.
Front Section, Pages 7 on 02/13/2013