Tax surge gives US budget surplus

The president has said he wants to bring the deficit down to a level that will, in effect, cut it in half over his time in office for the last five years John Snow, US Treasury Secretary Treasury boss upbeat on US growth

Record corporate tax receipts have given the US government the first December budget surplus in four years.

The $10.98bn (£6.2bn) surplus was twice the size expected by Wall Street analysts and a sharp turnaround from the $83bn deficit in November.

But with government spending also running at record levels, the tax boost will do little to wipe out the government's overall budget deficit.

The budget deficit of this fiscal year could reach $400bn, officials said.

Joel Kaplan, deputy director of the White House budget office, blamed high government spending on rebuilding the US Gulf Coast, following a string of devastating hurricanes last summer.

Critics of the US administration blame the high cost of the war in Iraq and President Bush's programme of tax cuts for the budget deficit.

On Wednesday, US Treasury Secretary John Snow had said the US economy was in a "good position" to continue growing strongly in the coming year.

He had told the BBC that he was confident that plans to cut the country's bulging budget deficit would succeed.

The deficit stood at $318.62bn (£181.7bn) in the year to September.

The overall US deficit has dropped from a record $412.85bn in 2004, but the US government has pledged to continue bringing down the figure.

December is always a strong month for taxes flowing to the US Treasury, but December 2004, for example, saw the government suffer a $2.85bn deficit.