The U.S. budget deficit narrowed in March from a year earlier as spending shrank almost 21 percent during the first month of mandatory federal cutbacks known as sequestration.
The shortfall totaled $106.5 billion after a $198.2 billion gap in March 2012, the Treasury Department said Wednesday in Washington. Economists projected a $107 billion deficit, according to the median estimate in a Bloomberg survey.
President Barack Obama laid out his $3.8 trillion budget proposal for fiscal 2014 Wednesday as lawmakers and the administration battled to agree on deficit cuts and ways to replace across-the-board, automatic spending cuts that took effect March 1. Republicans proposed cutting spending to eliminate the deficit by 2023 while the Obama administration said spending cuts must be accompanied by further revenue increases such as the elimination of tax loopholes.
“The mountains of red ink coming out of Washington are less so as we look forward and you can thank those hard-nosed mandatory spending cuts for that,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report was released.
Wednesday’s report showed revenue rose 8.6 percent in March from the same month a year earlier, to $186 billion. Spending decreased 20.8 percent to $292.5 billion, it showed.
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