Government posts budget surplus in January

updated 2:33 p.m. ET Feb. 10, 2006

WASHINGTON - The federal government ran a $21 billion budget surplus last month, the best January showing in four years, as both spending and tax receipts set records for the month.

The Treasury Department said the government spent $209 billion last month, a record amount for January and up 7.9 percent from January 2005. Government tax receipts, however, also set a record for the month of $230 billion, up 13.7 percent from January 2005.

The faster growth in receipts than in spending pushed the suplus for the month to $21 billion, more than double the $8.6 billion surplus the government recorded in January 2005. It was the biggest January surplus since $43.7 billion in 2002.

For the first four months of the budget year that began on Oct. 1, the deficit totals $98.3 billion, an improvement of 10.2 percent from last year’s pace when the deficit totaled $319 billion.

The Bush administration on Monday estimated that the deficit for this year will hit a record in dollar terms of $423 billion, surpassing the old mark of $413 billion set in 2004. The administration blamed increased spending for hurricane relief and the costs of wars in Iraq and Afghanistan for the increase.

However, private economists believe the deficit, while up from last year, will be smaller than the administration’s forecasts. Many forecasters are pegging this year’s deficit at around $360 billion.

They note that the administration for the past two years has estimated a deficit for the current budget year that is significantly higher than other forecasts, allowing them to claim improvement at the end of the budget year.

President Bush has promised to cut the deficit in half by 2009, the year he will leave office. But that pledge is linked to a projected deficit of $521 billion for 2004 that never materialized.

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