Deficit hits $1 trillion in June for second year

The federal deficit in June surpassed the $1 trillion mark for the second straight year, but it's on pace to be slightly lower than last year.

The deficit was $1.005 trillion at the end of June for fiscal year 2010, which is $81 billion less than it was after nine months of fiscal 2009, according to a Congressional Budget Office (CBO) report released late Wednesday.

Tax revenues, due to improved corporate tax receipts, are slightly up while spending is slightly down compared to last year.

If that trend holds, the 2010 deficit would be slightly lower than last year's $1.4 trillion budget shortfall, a record in nominal dollars, and lower than CBO's earlier 2010 deficit projection of $1.5 trillion.

Revenue from corporate income taxes grew 31 percent over the same period in 2009, to $133 billion.

"That increase reflects higher taxable profits in 2010, resulting both from improved economic conditions and from lower depreciation charges," the CBO report said.

The improved revenue from corporations in June could bode well for corporate tax receipts for September, the final month of the fiscal year, CBO said.

The gain from corporate receipts, however, was virtually offset by a 4 percent decline in individual income and payroll taxes. Total tax revenue only improved by 0.5 percent, to $1.597 trillion.

Overall federal spending has dropped this year by about 3 percent, to $2.6 trillion.

That's largely due to about $350 billion less in spending on bailout programs for financial firms in 2010 than last year.

Spending on entitlement programs, the military and unemployment benefits has risen by about 9 percent.