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Surprise! Huge US budget surplus shatters record

Thursday, 11 Jul 2013 | 2:37 PM ET
U.S. Treasury
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U.S. Treasury

The U.S. government posted a budget surplus in June, the latest sign of rapidly improving public finances that could reduce the urgency in Congress to strike a deal to raise the nation's limit on borrowing.

Rising tax revenues, public spending cuts and big payments to the Treasury from state-backed mortgage firms helped the government take in $117 billion more last month than it paid out, the U.S. Treasury said on Thursday.

Analysts polled by Reuters had expected a smaller surplus of $39.5 billion.

June's surplus was the largest for that month on record.

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An improving economy and tax hikes enacted earlier in the year led government receipts to rise to $287 billion, up 10 percent from a year earlier.

Also driving the surplus in June, state-backed mortgage companies Fannie Mae and Freddie Mac, which were bailed out by taxpayers in the wake of the financial crisis but have since returned to profitability, poured billion of dollars into public coffers.

Fannie Mae, which said in May it would return $59 billion to the Treasury in dividends, provided most of the funds.

The improving budget picture has drained away Congress' urgency to negotiate a budget deal that would raise the federal borrowing limit.

Across-the-board budget cuts began March, which also contributed to the surplus.

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