US Treasury Records Budget Surplus of $3bn for January, Targets Reduced Annual Deficit

The US federal government has posted a budget surplus of $3bn for the month of January, the first monthly surplus since September last year.

This year's surplus follows the $27bn deficit recorded in January 2012. Reuters reports the marked improvement may be the result of a Social Security tax increase of nearly $9bn in the first month of 2013.

The United States' financial year began on 1 October 2012 and after four months the deficit stands at $290.4bn, $60bn lower than the corresponding period last year. This suggests the government is set to run at the lowest annual deficit since President Barack Obama took charge.

Revenue so far in the current budget year is 12.4 percent higher than last time around, and spending has grown only 3.5 percent. The Huffington Post cites forecasts from the Congressional Budget Office (CBO) suggesting a total deficit of $845bn on 30 September (the end of the financial year).

Should the forecast prove correct, it will be the first time since 2008 that the US government has run at a annual deficit of less than a $1tn.

An increased rate of growth for the economy and better job creation is also likely to play its part in reducing the deficit. In addition, the January deal to avert the fiscal cliff includes a provision to raise taxes on individuals earning more than $400,000 per year, which should lead to over $600bn over the next decade. The two percentage point cut in Social Security tax alone will raise over $10bn a month.

Further surpluses are also expected in April (2012 saw a $59bn gain) when income tax revenue is collected. A further $85bn in spending cuts is scheduled on 1 March, unless a deal is reached to avoid them.

The CBO believes the annual deficit will continue to decrease over the next two years; they're targeting $616bn for 2014 and $459bn for 2015. The deficit reached a record high of $1.41tn in the 2009 budget year and the last time the government ran an annual surplus was in 2001.