US gov't on pace for smaller deficit in 2012

By DEREK KRAVITZ | January 12, 2012 | 2:10 PM EST

WASHINGTON (AP) — The federal deficit was lower in the first quarter of the budget year than the same period last year.

That's modest progress for a nation that has struggled with trillion-dollar deficits. Still, the imbalance remains high by historical standards and should keep lawmakers debating tax increases and spending cuts through Election Day.

The Treasury Department says the deficit was $86 billion in December. And it was $322 billion through the first three months of the budget year — $47 billion less than the same time last year.

The Congressional Budget Office estimates the government will run a $973 billion deficit for the budget year that began on Oct. 1. While lower than last year's $1.3 trillion imbalance, it would be higher than any previous deficit before fiscal year 2009.