US budget deficit expanded slightly in fiscal first half

WASHINGTON (AP) – The deficit through the first half of the budget year ran slightly above last year’s pace, with the March imbalance up $16 billion over a year ago.

The Treasury Department said Monday that the March deficit came to $52.9 billion compared to a deficit of $36.9 billion in March 2014. Through the first six months of the budget year, the deficit totaled $439.5 billion, 6.3 percent higher than last year’s six-month deficit of $413.3 billion.

The Congressional Budget Office is forecasting a full-year deficit of $486 billion, roughly on par with 2014’s deficit of $483.4 billion.

Congress returned Monday from a two-week recess facing what is expected to be months of wrangling between Republicans and Democrats over competing budget plans.

The latest budget report showed that government revenues over the last six months totaled $1.42 trillion, up 7.3 percent from a year ago. Government spending over the same period totaled $1.86 trillion, an increase of 7.1 percent over the previous year. Spending on Medicare rose 8 percent, and spending on Medicaid shot up 23 percent.

The 2014 deficit was down from $680.2 billion in 2013. Before 2013, the U.S. had recorded four straight years of annual deficits above $1 trillion, reflecting the impact of a severe financial crisis and the worst recession since the Great Depression of the 1930s.

President Barack Obama in February unveiled a budget proposal for 2016 – his final full year in office – that seeks authorization from Congress to spend $4 trillion next year. It projects a 2016 deficit of $474 billion.

Obama’s spending plan would raise $2 trillion in higher taxes over the next decade from the wealthy, corporations and smokers while granting tax breaks to low-income and middle-income families. It would boost spending on domestic programs such as increased road construction and a proposal to provide a free community college education to students who qualify.

Republicans have attacked Obama’s proposals for the tax increases and a failure to ever reach balance. Last month, they pushed through the House and Senate broadly similar measures that claim to erase the deficit entirely over the next decade.

The GOP proposals would trim deficits by $5 trillion without raising taxes but with sharp reductions in health care and other government benefit programs. But Democrats contend that the GOP proposals rely heavily on accounting gimmicks.

Passage of the GOP measures sets the stage for months of wrangling with the administration over a final spending plan for the budget year that begins Oct. 1. Congress will also face a fall deadline for raising the government’s borrowing limit.

Republican leaders have said they do not want a repeat of the partial government shutdown that occurred in October 2013 or the 2011 standoff over raising the debt ceiling that triggered the first-ever downgrade of the federal government’s AAA credit rating.