US government budget deficit totals $136.5 billion in October, up from year ago

WASHINGTON – The U.S. government started its new budget year with a deficit in October, although the imbalance was made worse by a calendar quirk.

The October deficit totalled $136.5 billion, up 12.2 per cent from October 2014, the Treasury Department reported Thursday.

In both years, Nov. 1 fell on a weekend, which required the government to mail out November benefit checks in October. That shifted $49 billion in payments into October, up from last year’s $41 billion payment shift.

For the 2015 budget year that ended Sept. 30, the annual deficit fell to $438.9 billion, its lowest level in eight years, spurred by gains in tax revenue that outpaced greater government spending.

The Congressional Budget Office in August forecast that the 2016 deficit will drop to $414 billion and edge up slightly to $416 billion in 2017, which will be the next president’s first year in office.

After 2017, the CBO expects the deficits to begin rising sharply, reflecting significant growth in government spending on Social Security and health care benefits as the baby boomer generation retires. CBO expects the deficits to keep climbing and top $1 trillion annually by 2025.

Congress is facing a Dec. 11 deadline to reach agreement on an omnibus spending bill which will cover the one-third of the budget that Congress must approve each year in annual appropriations bills. The broad outlines of a budget deal were reached in negotiations overseen by former House Speaker John Boehner, R-Ohio, before he handed over his job to new Speaker Paul Ryan, R-Wisconsin.

The agreement reached last month satisfied demands by President Barack Obama and Democrats for significant increases in spending above the limits imposed by a 2011 budget law. While Obama had sought $74 billion above the caps for 2016, the final deal provided for an increase of $66 billion, evenly divided between defence and domestic spending.

Treasury’s October budget report said receipts totalled $211 billion for the month, down 0.8 per cent from a year ago. Spending for October totalled $347.6 billion, 3.9 per cent higher than a year ago.