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U.S. Oct.-Dec. budget deficit narrows sharply: CBO

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[January 09, 2014]  WASHINGTON (Reuters)  The U.S. government's budget deficit fell by more than a third in the first three months of fiscal 2014 to $182 billion, including a $44 billion surplus in December, the Congressional Budget Office estimated on Wednesday.

The cumulative budget gap for October, November and December was $111 billion below the year-ago-period, continuing a trend of shrinking deficits due to an improving economy and higher tax collections.

Net revenues rose 7.7 percent, or $38 billion, in the October-December period, mostly because of higher social insurance taxes after a temporary reduction expired at the end of 2012, CBO said.

Outlays for the three-month period fell by 7 percent, or $62 billion, as military spending fell $11 billion, unemployment benefits fell $4 billion and net interest on the public debt fell by $7 billion.

Government controlled mortgage finance groups Fannie Mae and Freddie Mac also contributed $34 billion more to the Treasury than during the year-ago period as their net worth improved.

The $44 billion December surplus compares with a $1 billion deficit a year earlier, the CBO said, even though revenues in December 2012 benefited from stronger realization of income by wealthy individuals hoping to avoid tax increases in January 2013.

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The U.S. Treasury Department is expected to report official budget figures for December and the first three months of the 2014 fiscal year on January 13.

(Reporting by David Lawder; editing by Jonathan Oatis)

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