US Budget Deficit Drops By 37 Percent, Lowest In Five Years

The U.S. government saw a budget deficit of $680.3 billion for fiscal year 2013, showed Treasury Department data on Wednesday, a 37 percent drop from the fiscal 2012 deficit and marking the first time in five years that the figure has been below $1 trillion.

The U.S. government saw a budget deficit of $680.3 billion for fiscal year 2013, showed Treasury Department data on Wednesday, a 37 percent drop from the fiscal 2012 deficit and marking the first time in five years that the figure has been below $1 trillion.

According to AFP, significant tax increases and spending cuts had allowed the federal government to reduce its budget deficit, though the figure is still the 5^th highest shortfall of all time.

Tax receipts rose by 13.3 percent, to $2.77 trillion while government spending fell 2.4 percent to $3.45 trillion.

The budget gap has fallen at its fastest pace since World War II over the last four years, Treasury Secretary Jack Lew said, as cited by Reuters. In 2009, the budget deficit was more than $1.4 trillion, when the government spent heavily to battle recession.

[quote]”Congress must (now) build on this progress by crafting a pro-jobs and pro-growth budget agreement that strengthens the economy while maintaining fiscal discipline,” said Lew.[/quote]

As a percent of GDP, the budget deficit was also considerably smaller than it’s been in the past five years, at 4.1 percent. By contrast, the annual deficit in 2009 topped 10% of GDP, while last year it was 6.8 percent.

Related: US Deficit Shrinking Faster Than Expected: CBO

Related: US Debt To Be Twice The Size Of GDP By 2037

These latest figures will now serve as a key discussion point ahead of budget talks this week, where Democrats are likely to call for more tax reforms to boost revenues, while Republicans will remain insistent on more spending cuts.

“I want to say this from the get-go: If this conference becomes an argument about taxes, we’re not going to get anywhere,” said Representative Paul Ryan, the House of Representatives Budget Committee chairman, who is leading the Republicans on the panel.

Democratic leaders of the conference committee have already said they wanted part of any budget savings to come from increased revenue raised by closing some tax breaks for corporations and wealthy Americans.