US budget deficit narrows in February

The US budget deficit for the month of February narrowed from a year ago, government data released Wednesday showed.

The federal budget had a shortfall of $203.5 billion for the month, 12 percent lower than a year ago, the Treasury Department said in a statement.

Revenues jumped 19 percent to $122.8 billion, benefiting in part from a payroll tax hike on January 1 as a temporary reduction in Social Security deductions expired.

Spending fell 3 percent to $326.3 billion as the government continued to pare costs to try to curb the rising budget deficit and debt. The sharpest spending cuts came in labor spending, down 32 percent, and education, down 21 percent.

Over the first five months of the 2013 fiscal year that began on October 1, the budget deficit totaled $494.0 billion, 15 percent lower than a year earlier.

Large across-the-board spending cuts, known as the sequester, that began on March 1 were expected to further shrink the deficit in the coming months.

A result of the political deadlock between Democrats and Republicans over budget plans to reduce the deficit, the sequester cuts will slash $85 billion in spending over the next seven months of fiscal 2013.

According to the Congressional Budget Office, an independent nonpartisan agency that advises Congress on budget issues, the US budget deficit was projected to shrink to $845 billion in 2013, or 5.3 percent of gross domestic product, its smallest size since 2008.

The CBO says that under current laws the deficit would continue to shrink over the next few years after hitting $1.1 trillion in 2012.