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2010 deficit near $1.3 trillion

By Jeanne Sahadi, senior writer


NEW YORK (CNNMoney.com) -- The federal government ran a deficit of nearly $1.3 trillion in the fiscal year that ended Sept. 30, according to preliminary estimates released Thursday by the Congressional Budget Office.

The Treasury Department will deliver the official deficit numbers later this month.

According to CBO, the fiscal year 2010 deficit came in $125 billion below last year -- the worst on record since World War II.

The gap narrowed slightly because tax receipts were higher and spending lower than last year.

On the tax front, corporate revenue rose by $53 billion, or 39%, from 2009. Stronger corporate profits were the result of improved economic conditions and more generous rules for writing off business expenses.

The Federal Reserve's investments in the housing market and other areas of the economy also paid off for Uncle Sam. Receipts from the Fed to the Treasury rose $42 billion, or 121%, over 2009.

Overall government spending fell. The costs of the Troubled Asset Relief Program, which just ended, and payments to mortgage giants Fannie Mae and Freddie Mac declined. The same is true for funds spent on federal deposit insurance.

But other than that, the CBO reported, spending rose at a faster pace -- 9% -- than it has in awhile. Much of that increase was due to greater spending on the unemployed, on benefits for Medicare, Medicaid and Social Security and various provisions in the 2009 Recovery Act.

The federal cost of benefits for the jobless alone rose by 34% as the economy continued to suffer high rates of unemployment.

Interest payments on the debt also rose 13%. To top of page

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