updated 3/12/2007 2:51:27 PM ET 2007-03-12T18:51:27

The deficit for the first five months of the budget year is down sharply from a year ago as the growth in government tax collections continues to outpace growth in spending.

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The Treasury Department reported that the deficit from October through February totaled $162.2 billion, down 25.5 percent from the same period last year.

That improvement came even though the deficit in February hit $120 billion, up 0.6 percent from last February’s deficit of $119.2 billion.

The government had larger-than-expected surpluses in December and January.

For the budget year that began Oct. 1, revenues are up by 9.3 percent to a record $954.4 billion.

Spending for the period also set a record at $1.117 trillion, but that 2.3 percent rise was slower than the growth in revenues, resulting in a lower deficit.

The Bush administration is forecasting that the deficit for this year will total $244 billion, a slight improvement from the $248.2 billion actual deficit for the 20006.

However, the Congressional Budget Office is more optimistic, forecasting that the deficit for the current budget year should decline to $214 billion. That forecast assumes that Congress will approve President Bush’s supplemental spending request for the war in Iraq.

The $248.2 billion deficit for 2006 was the smallest deficit in four years and down significantly from the all-time high, in dollar terms, of $413 billion in 2004.

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