U.S. deficit ends fourth fiscal year above $1 trillion-CBO

* $200 billion decline in deficit vs last year, CBO says

* September produced $75 billion surplus as receipts grew

* Fiscal 2013 deficit depends on Congress, fiscal cliff

By David Lawder

WASHINGTON, Oct 5 (Reuters) - The federal budget deficit forthe just-ended 2012 fiscal year shrank by $207 billion from theprior year, but still marked its fourth straight year above $1trillion, Congress' budget referee estimated on Friday.

The deficit equaled about 7 percent of U.S. economic output,down from 8.7 percent in 2011, 9 percent in 2010 and 10.1percent in 2009, but it was still greater than in any other yearsince 1947, the non-partisan Congressional Budget Office said.

Economists generally consider any deficit that exceeds 3percent of U.S. grosss domestic product to be unsustainable inthe long term.

CBO said a $75 billion surplus September surplus helped tohold the full-year fiscal 2012 deficit to $1.09 trillion,compared with a $1.297 trillion deficit in fiscal 2012.

The September surplus was just the second month in the blackfor the U.S. government since September 2008, when the countrywas in the throes of a financial crisis. The September data wasbuoyed by strong quarterly corporate income tax payments and $7billion from the sale of shares in bailed-out insurer AmericanInternational Group .

The U.S. Treasury is expected to release official finalfigures for the year ended Sept. 30 next week.

Republicans, including presidential nominee Mitt Romney,have long been hammering President Barack Obama for overseeingfour straight years of trillion-dollar deficits during his timein office. Democrats have countered that these were necessary toavoid another depression and help dig out of a deep recessionthey inherited.

Whether the U.S. deficit will mark a fifth year above $1trillion in fiscal 2013 depends on how Congress handles theyear-end "fiscal cliff" of expiring tax cuts and automaticspending cuts.

If that massive fiscal tightening happens as scheduled, thedeficit could be as low as $641 billion next year, according toa CBO estimate in August. But if Congress keeps current taxrates in place and finds a way to avoid the spending cuts, CBOestimates the deficit at about where it is now -- $1.04trillion.

In September's rare surplus, the CBO estimated that receiptsgrew $23 billion compared with a year earlier, while outlaysshrank by $115 billion.

Most of the spending decline was the result of calendarshifts associated with benefit payments, but adjusting for this,there were some notable changes.

Net payments to government-controlled housing finance giantsFannie Mae and Freddie Mac fell by $7billion in September because they did not need any capitalinjections. Outlays for unemployment benefits fell by $6 billionwhile military spending fell by $5 billion.

For the full fiscal year, total receipts grew 6.4 percent to$2.45 trillion, while outlays fell 1.6 percent to $3.54trillion, CBO estimated.

Individual income tax receipts rose 3.4 percent whilecorporate income tax collections rose 33.7 percent. Mostcategories of spending fell, except for Social Securitybenefits, which rose 5.9 percent, to $762 billion, and Medicare,which rose 3.2 percent to $469 billion after adjusting foroffsetting receipts.

(Editing by Leslie Gevirtz)

((David.Lawder@thomsonreuters.com)(+1 202 898 8391)(ReutersMessaging: david.lawder.thomsonreuters.com@reuters.net))