The budget posted a surprise surplus in January for the first time in five years, as the Treasury likely benefited from a windfall when payroll tax cuts expired.
The budget registered a $3 billion surplus, the first time there had been a surplus in January since 2008, Treasury Department data showed on Tuesday. Economists had been looking for a $2 billion gap. The surplus compared with a $27 billion deficit in January 2012.
It appeared the Treasury got a boost from the expiration of a payroll tax reduction on January 1 following the last-minute “fiscal cliff” deal. In its estimate last week, the Congressional Budget Office said the Treasury got an extra $9 billion in taxes from the expiry.
The January surplus means the government’s cumulative deficit for the fiscal year, which starts in October, is $290 billion, 17 percent lower than the comparable first four months of fiscal 2012.
During fiscal 2012 which ended September 30, the budget deficit totaled $1.089 trillion.
Growth in receipts outpaced rising spending, narrowing the deficit. Receipts grew to $272 billion from $234 billion in the same month last year while outlays rose to $269 billion in January of this year from $262 billion in January 2012. So far in the first four months of fiscal 2013, receipts are $98 billion higher compared to the same period a year ago.
The extra fiscal space should leave the Treasury with plenty of room to stave off default after a debt-limit extension expires on May 19.
Congress on January 31 passed a measure that allows Treasury to borrow sufficiently to meet federal obligations until May 19, at which time another increase in the federal debt limit will be needed.
But even if no increase is granted, Treasury will be able to stave off a final day of reckoning until late July or early August by redeploying emergency cash management measures which allow it to claw back about $220 billion worth of borrowing capacity.