US Government Deficit To Shrink By 27 Percent In 2014: Report
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The U.S.’s annual deficit is expected to fall by nearly $188 billion – from $680 billion in 2013 to $492 billion – this year, according to the Congressional Budget Office (CBO) on Monday.
The CBO, a nonpartisan agency that advises Congress on budget policy, predicted that the deficit would be equivalent to 2.8 percent of gross domestic product, marking the smallest deficit by percentage since 2007.
The U.S.’s annual deficit is expected to fall by nearly $188 billion – from $680 billion in 2013 to $492 billion – this year, according to the Congressional Budget Office (CBO) on Monday.
The CBO, a nonpartisan agency that advises Congress on budget policy, predicted that the deficit would be equivalent to 2.8 percent of gross domestic product, marking the smallest deficit by percentage since 2007.
CBO also revised down the government’s projected 10-year deficit by $286 billion, to $7.6 trillion, mainly due to lower than expected subsidies related to Obamacare and reduced spending in interest payments and the defence budget.
“This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009,” CBO said its report. The 2.8 figure as a percentage of GDP is also lower than the 3.1 percent average of the last 40 years, CBO noted.
However, the CBO warned that the downward trajectory may not last for long. By 2016, the CBO expects annual deficits to start rising again – driven in part by the aging population and rising health-care costs.
Deficits will reach a low point of $469 billion, or about 2.6 percent of GDP in 2015, before gradually start to rise, topping $1 trillion again in 2023 and 2024, a level that would be near 4 percent of GDP, said the CBO.
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“If current laws do not change, the period of shrinking deficits will soon come to an end,” they said.
The U.S. government is expected to spend $3.523 trillion in 2014, or 20.4 percent of GDP. Two-thirds of the spending will be directed to military-related programs and benefits for Medicare, Social Security and Medicaid, the CBO said.
The CBO also forecasts that the U.S. government will bring in $3.032 trillion in revenue, a figure that represents 17.6 percent of GDP. Most of that will come from individual income taxes and payroll taxes.
