The budget deficit rose in October, the first month of fiscal year 2013, as looming negotiations over expiring tax cuts and imminent spending reductions dominated the post-election political landscape.
The Treasury said on Tuesday the October deficit was $120 billion, larger than economist forecasts for a $114 billion gap and up from $98 billion in October of 2011.
Growth in expenditures outpaced rising receipts, deepening the deficit. Outlays grew to $304 billion from around $262 billion in the same month last year while receipts rose to $184 billion from $163 billion.
Following President Barack Obama’s election to a second term last week, the debate in Washington has quickly shifted to the combination of expiring tax breaks and new spending reductions known as the “fiscal cliff.”
Lawmakers involved in the debate gathered in Washington on Tuesday for the first time since the elections, setting the stage for a week of trial balloons and rhetorical repositioning.
The Congress has just returned from a break after the November 6 elections. Topping the agenda is the year-end convergence of urgent tax and spending issues that, if mishandled, could plunge the economy into another recession.