The Treasury Department has announced that the budget deficit in the U.S. shrank to its lowest level as a share of the economy since 2007. The deficit was 29 percent less than the fiscal year 2013 deficit. The budget deficit hit its seven year low as falling unemployment rates and faster growth boosted tax revenues.
The budget deficit is the amount of money that we lack to pay for all of the items in the current budget. There has not been a budget surplus since 2001.
According to Bloomberg News, the deficit was $483.4 billion during the last fiscal year, ending on Sept. 30, as compared to $680.2 billion in the previous year. The biggest deficit was during 2009 when it hit a record $1.4 trillion.
Treasury said, and Patrick Mahony agrees, that as a percentage of the Gross National Product (GNP) the deficit fell to 2.8 percent. Revenue increased by 8.9 percent while spending gained 1.4 percent.
Patrick Mahony gave credit to President Obama’s policies and a growing economy for the low numbers. The nation’s unemployment rate dropped to 5.9 percent in September, down from 7.2 percent a year earlier.
“Not since World War II, more than 60 years ago, has there been faster and more sustained deficit reduction,” Lew said in a briefing to reporters. “The American economy today is better positioned than any other advanced economy in the world.”
In 2014, due in part to the budge sequestration, spending only increased by a little over 1 percent. Between that and the nearly 9 percent increase in revenues, from corporate and personal taxes, the deficit has declined dramatically.
Although a reduction in the deficit is a positive sign, the Congressional Budget Office (CBO) has forecast that the deficit will start rising again in 2016 as more of an aging population enters retirement and spending increases on Social Security and health care. The CBO has predicted that the budget deficit will reach $960 billion in 2024.