WASHINGTON - The U.S. federal budget deficit grew more slowly in March, keeping the annual spending shortfall on pace to finish below $1 trillion for the first time in five years.
The deficit grew by $106.5 billion in March, well below the $203.5 billion added in February, the Treasury Department said Wednesday.
Through the first six months of the year, the deficit has reached $600 billion. That's smaller than the $779 billion racked up in the first six months of the 2012 budget year. The budget year began on Oct. 1.
The deficit for the 2013 budget year is expected to be $845 billion, according to analysis by the independent Congressional Budget Office. That's down from $1.1 trillion in the 2012 budget year and the lowest since 2008.
The CBO estimate may be higher than the actual deficit. It does not reflect across-the-board spending cuts that took effect March 1.
In its budget request released Wednesday, the White House's budget office projected an annual deficit of $973 billion. That would still be the lowest in five years.
Higher Social Security taxes are helping to reduce the monthly deficit this year. The tax on most American's paychecks is 2 percentage points higher this year, boosting revenue in March by about $10 billion, the CBO said. The tax hike is projected to boost revenue by about $10 billion per month for the rest of the budget year, which ends Sept. 30.
The single biggest factor in March's decline related to emergency programs launched during the 2008 financial crisis. Payments from mortgage giants Fannie Mae and Freddie Mac increased $11 billion. Treasury also reduced by $26 billion the official cost of the bank bailouts and a related program to buy toxic mortgage investments.
The deficit hit 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.
President George W. Bush also ran annual deficits through most of his two terms in office after he won approval for broad tax cuts and launched wars in Afghanistan and Iraq.
The last time the government ran an annual surplus was in 2001.