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Annual federal deficit nears $1 trillion

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The federal deficit is bumping up against the $1 trillion mark for the fourth straight year, having reached $975 billion through the end of July with two more months still to go in the fiscal year, the Congressional Budget Office said Tuesday.

Still, CBO analysts said that estimate is substantially behind last year’s deficit pace, chiefly because tax revenues are growing so quickly.

Federal government revenues are up 6 percent in the first 10 months of fiscal year 2012 when compared with the same time period in 2011, the CBO said — and were driven chiefly by higher receipts from corporate taxes, which grew by $42 billion, or 30 percent.

“The growth in corporate receipts this year is largely attributable to changes in tax rules in recent years — in particular, the rules governing how quickly firms may deduct the cost of their investments in equipment,” the CBO report said.

Individual income tax payments grew by $37 billion or 4 percent, powered by higher wages.

Overall, defense, Medicaid and unemployment benefit spending are down this year, while Social Security and Medicare spending are up.

The nonpartisan congressional budget agency releases a monthly estimate of the federal fiscal picture. Official Treasury Department numbers for July are due to be released later this month.

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