Deficit Dip: Lowest Since 2008
The annual federal deficit, as it sits now, is at its lowest since 2008. What’s more — or in this case, less — it’s 51 percent lower than 2009 when it reached a record $1.4 trillion, compared to the present $680 billion. According to CNN Money, this is the smallest percent of the economy the deficit has taken up in the past five years at 4.1 percent of the GDP. The annual deficit, at its highest in the past five years, reached 10 percent of the GDP.
The present 4.1 percent of the GDP is down from last year’s 6.8 percent. Where did this financial improvement come from? The treasury has said that it’s a result of higher receipts — explaining 79 percent of the drop that occurred this year. The economy has recovered a fair amount, and budget cuts alongside a tax increase on the wealthy has also aided in the debt decrease.
More money is coming in as well, which doesn’t hurt, with 16.7 percent of GDP flowing into the U.S. bank account, a rise from the 15.2 percent of last year. Fannie Mae and Freddie Mac have been slipping money in as well, paying back $187 billion of its federal bailout from 2008. Spending has decreased to 20.8 percent from 2012′s 22 percent, and it has been estimated that the annual deficit will decrease to 2.1 percent of GDP by 2015.
“Under President Obama, the nation’s deficit has fallen for the past four years, the fastest pace of decline over a sustained period since World War II. It is now less than half of what it was when the President took office. Congress must build on this progress by crafting a pro-jobs and pro-growth budget agreement that strengthens the economy while maintaining fiscal discipline,” said the U.S. Treasury Secretary, Jacob J. Lew on the matter, according to the Department of Treasury.
According to CNN Money, just because the national debt is shrinking doesn’t mean there aren’t any budgetary concerns. It is expected that in the coming years there will be an increase in money put into entitlement programs, as well as spending on interest on debt — this will take up a good portion of the budget, but revenue isn’t looking like it will be increasing at the same rate.