WASHINGTON (AP) -- The federal budget deficit narrowed slightly in December compared to a year ago, but the deficit for the entire year is still on pace to exceed $1 trillion.

The government ran a deficit of $80 billion last month, down 12.4 percent from the previous December, the Treasury Department said Wednesday. Through the first three months of the current budget year, the deficit totals $370.8 billion, an improvement of 3.1 percent from the same period a year ago.

Private economists expect that the tax-cut package signed into law last month will lead to a much larger deficit while also helping to boost economic growth.

The tax package provided a one-year reduction in Social Security taxes for individuals and accelerated tax breaks for businesses that invest in new equipment. It also extended for two years Bush-era tax cuts.

The estimated cost of the package is $858 billion, an amount that will be added to deficits over the next two budget years.

Economists at Goldman Sachs are forecasting that the deficit for the current 2011 budget year, which began Oct. 1, will total $1.3 trillion, giving the country a third consecutive year of $1 trillion plus deficits.

Through the first three months of the current budget year, government receipts total $531.8 billion, 9 percent higher than the same period a year ago. That reflected higher individual and corporate tax payments, a sign that the economy is gaining strength.

Government spending during this period totaled $902.6 billion, an increase of 3.1 percent over the same period a year ago.

The 2010 deficit was $1.29 trillion and followed an all-time high of $1.41 trillion in 2009. The government spent billions of dollars in that period to stabilize the financial system and try to jump-start the economy after the recession hit.

Still, unhappiness over soaring budget deficits led to a power shift in the new Congress. Republicans won control of the House and gained Senate seats in the November elections after promising spending cuts to reduce the deficit during the campaign.

Republicans now want Democrats to agree to spending cuts for the current budget year before they vote to raise the debt ceiling.

Treasury Secretary Timothy Geithner informed congressional leaders last week that the current ceiling of $14.3 trillion will be hit sometime between March 31 and May 16.

Geithner urged quick passage of a new borrowing limit, although he did not specify an amount. He said increasing the limit was needed to avoid an unprecedented government default on its debt obligations. Otherwise, the nation could face "catastrophic economic consequences."