WASHINGTON – Helped by increasing revenues and spending restraint, the federal government is on track to record the lowest annual deficit in six years. The Treasury Department issues its report Tuesday at 2 p.m. Eastern.
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JULY DEFICIT: The Congressional Budget Office expects the July deficit to total $96 billion, compared with a deficit of $97.6 billion in June 2013.
LESS RED INK: Through June, the deficit for the budget year that began Oct. 1 totaled $365.9 billion, 28.2 percent below the same period a year ago.
In its latest monthly budget review, CBO said it believed the deficit for the current budget year would be around $500 billion. That would be slightly higher than the $492 billion it estimated in April but it would still be the lowest deficit since 2008 when the deficit totaled $458.6 billion, a record high for that time.
With the onset of the Great Recession, deficits soared to unprecedented levels, exceeding $1 trillion for four consecutive years. Tax revenues fell during that period, while government boosted spending in an attempt to stabilize the financial system and provide relief to people who had lost jobs.
The yearly deficit peaked at $1.4 trillion in 2009, dropping to $680.2 billion last year.
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CBO projects the deficit will fall to $469 billion in 2015 before starting to rise again, topping $1 trillion annually starting in 2023. Spending on the government's major benefit programs, including Social Security and Medicare, will drive those increases as more baby boomers retire.
Republicans have accused President Barack Obama of failing to propose significant cuts to reduce soaring entitlement costs. Democrats counter that Republicans would rather impose sharp cuts on needed government programs than impose higher taxes on the wealthy.
Neither side is expected to make major concessions in this congressional election year. But the budget wars of the past three years have subsided at least for a brief time. An agreement was reached in December on the broad outlines for spending over the next two years. The agreement will allow Washington to avoid the gridlock that culminated in October's 16-day partial shutdown of the government.
The budget cease-fire also includes legislation that suspended the government's borrowing limit through March 15 of next year. That puts off another battle over raising the debt ceiling until a new Congress takes office in January.