US government runs $120 billion October deficit

A soaring deficit puts added pressure on President Barack Obama and Congress to seek a budget deal in the coming weeks.

The Treasury Department said Tuesday that the October deficit — the gap between the government's tax revenue and its spending — was 22 percent higher than the same month last year.

Tax revenue increased 13 percent from the same month last year to $184.3 billion. But spending rose 16.4 percent to $304.3 billion. Spending was held down last October by a quirk in the calendar: the first day of the month fell on a Saturday, so some benefits were paid in September 2011.

The deficit, in simplest terms, is the amount of money the government has to borrow when revenues fall short of expenses. The government ran a $1.1 trillion annual budget deficit in the fiscal year that ended in September. That was lower than the previous year but still painfully high by historical standards.

Obama's presidency has coincided with four straight $1 trillion-plus deficits — the first in history and a record he had to vigorously defend during his re-election campaign.

The size and scope of this year's deficit will largely depend on what happens with a package of tax increases and spending cuts set to take effect in January unless the White House and Congress reach a budget deal by then.

If the economy goes over the fiscal cliff, this year's deficit would shrink to $641 billion, according to the Congressional Budget Office. But the CBO also warns that the economy would sink into recession in the first half of 2013.