WASHINGTON — The federal government started the 2013 budget year with a $120 billion deficit in October, an indication that the nation is on a path to its fifth-straight $1 trillion-plus annual deficit.
A soaring deficit puts added pressure on President Barack Obama and Congress to seek a budget deal in the coming weeks.
The Treasury Department said Tuesday that the October deficit — the gap between the government's tax revenue and its spending — was 22 percent higher than the same month last year.
Tax revenue increased 13 percent from the same month last year to $184.3 billion. But spending rose 16.4 percent to $304.3 billion. Spending was held down last October by a quirk in the calendar: the first day of the month fell on a Saturday, so some benefits were paid in September 2011.
The deficit, in simplest terms, is the amount of money the government has to borrow when revenues fall short of expenses. The government ran a $1.1 trillion annual budget deficit in the fiscal year that ended in September.
Obama's presidency has coincided with four straight $1 trillion-plus deficits — the first in history and a record he had to vigorously defend during his re-election campaign.
The size and scope of this year's deficit largely will depend on what happens with a package of tax increases and spending cuts set to take effect in January unless the White House and Congress reach a budget deal. If the economy goes over the fiscal cliff, this year's deficit would shrink to $641 billion, according to the Congressional Budget Office. But the CBO also warns that the economy would sink into recession in the first half of 2013. If the White House and Congress extend the tax cuts and avoid the spending cuts, the deficit will end up roughly $1 trillion, the CBO says.
The last time the government ran an annual surplus was in 2001.
One of the biggest challenges for the federal budget is the aging of the baby boom generation. That is raising government spending on Social Security and on Medicare and Medicaid. At the same time, the fragile economy, along with tax cuts, has reduced government revenue.
The government is expected to hit its borrowing limit of $16.39 trillion by the end of December.