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Deficit headed to fall below $1 trillion

The federal government is on pace to run a deficit below $1 trillion for the first time in four years, modest progress in the face of intense debate in Washington over spending.

Still, part of the reason for the lower deficit is an accounting quirk.

The Congressional Budget Office estimates the government will run a $973-billion deficit for the 2012 budget year, which began on Oct. 1. While that's lower than last year's $1.3 trillion imbalance, it would still be higher than any previous deficit before fiscal year 2009.

The government ran a record deficit of $1.41 trillion in 2009, and a $1.29 trillion imbalance in 2010.

The CBO estimate does not include an extension of the Social Security tax cut and emergency unemployment benefits. Without offsetting spending reductions or revenue, those likely changes could push the deficit back above $1 trillion if those programs aren't offset. The two programs are estimated to cost around $200 billion.

One reason the first two months are lower than last year is an accounting shift. Roughly $31 billion in benefit payments for October went out in late September. Federal benefits are paid on the first day of the month. But because Oct. 1 fell on a Saturday, the payments went out a day earlier and were accounted for in last year's deficit. -- AP

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