U.S. December budget deficit $260 million

By Robert Schroeder, MarketWatch

WASHINGTON (MarketWatch) — The U.S. government ran a budget deficit of $260 million in December, the Treasury Department said Friday, the best showing for the final month in five years.

The small monthly budget gap is a rare but not unprecedented event: the U.S. ran two monthly surpluses in the last fiscal year in which it had a trade gap of $1.09 trillion.

For the fiscal year to date, the deficit of $292 billion is 9% lower than in the first three months of the prior fiscal year.

The monthly figures arrive as Washington is readying for another intense round of budget battles, including over the looming automatic spending cuts known as the “sequester” and raising the U.S. debt ceiling. Read more on Economy & Politics page.

In December, the government took in $269.5 billion, an increase of about 12% compared to December 2011. A 15% increase in individual withheld taxes helped contribute to the higher monthly receipts.

The government spent $269.7 billion in the month, 17% less than in the year-ago period, thanks to lower outlays for defense, Medicare and other programs.

Congressional Republicans are pressing the White House to cut spending, particularly on entitlement programs. President Barack Obama has insisted he will not negotiate around the debt ceiling and has said he is willing to cut spending that doesn’t affect education and other domestic priorities. He is also insisting on more tax revenue from closing loopholes and deductions for the wealthy and for big corporations.

In addition to the debt-ceiling brawl and automatic spending cuts, Washington is facing the prospect of a government shutdown if Congress doesn’t approve new spending bills in late March.

The Treasury is now using emergency measures to avoid hitting the debt ceiling, but by one estimate has only until mid-February until it exhausts its borrowing authority.