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Oct 7, 5:56 PM EDT

Congressional Budget Office: Budget deficit drops to $435B

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Congressional Budget Office: Budget deficit drops to $435B

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WASHINGTON (AP) -- Congressional budget analysts said Wednesday that the federal government ran a deficit of $435 billion in the just-completed budget year, the smallest deficit since 2007 and well below the record shortfalls of President Barack Obama's first term.

The Congressional Budget Office report says it's the sixth consecutive drop in a row for the deficit, when measured against the size of the economy, since the $1.4 trillion deficit of Obama's first term.

The improved deficit figures come as Washington is grappling with the need to increase the government's borrowing cap in early November. The White House and lawmakers on Capitol Hill are also seeking a separate agreement on a budget to keep the government open past a Dec. 11 deadline.

During Obama's first term, the deficit was greater than $1 trillion for four years in a row in the wake of the Wall Street bailout, a huge stock market drop and a major recession.

The budget office does nonpartisan analysis for Congress; the official government estimate from the White House budget office and Treasury Department typically is released in mid-October.

The stronger figures represent 8 percent growth in tax revenues, led by 10 percent growth in individual income taxes. Spending grew more slowly, though the cost of health insurance subsidies through exchanges established by the Affordable Care Act almost doubled, to $27 billion.

Two attempts by Obama and House Speaker John Boehner, R-Ohio, to negotiate a sweeping deficit-cutting package ended in failure after Boehner pulled out of the talks. Now, Obama is refusing to offer concessions in exchange for increasing the government's $18.1 trillion borrowing cap. Talks on a spending package that would ease cuts to agency budgets and replace them with savings elsewhere in the budget have just started.

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