Federal Budget Deficit Finally Dips to Pre-Recession Level
The Obama administration announced Friday with little fanfare that the federal budget deficit will fall below $600 billion for the first time since the Great Recession began in 2008.
The smaller deficit, estimated at $583 billion, was caused by slower defense spending, less-than-anticipated spending on Hurricane Sandy rebuilding and smaller-than-expected costs of Affordable Care Act (ACA) insurance subsidies. The ACA spending, however, is expected to increase in the coming years, according to The Washington Post.
Bigger deficits are on the horizon though. The administration expects them to increase because of slower growth because of the still-recovering economy. The White House is predicting only 2.6% growth this year, after previously saying the rate would be 3.3%.
Senate Budget Committee Chairman Patty Murray (D-Washington) hailed the deficit reduction. “Today’s report….shows once again that our fiscal outlook has improved significantly in the near-term,” she said in a statement. “While we need to continue to tackle long-term deficits fairly and responsibly, we have room to focus on other deficits in areas like jobs, innovation, infrastructure, and education.”
During the depths of the recession, the deficit reached $1.4 trillion. Budget cuts since have meant the government is spending less, but that has also slowed job growth, so tax receipts have not increased as much as they might have.
To Learn More:
Deficit To Dip Below $600 Billion For First Time Since Recession, White House Predicts (by Lori Montgomery, Washington Post)
U.S. Government Sees Biggest Budget Surplus in 5 Years (by Matt Bewig, AllGov)
U.S. Deficit at Highest Rate Since 1945 (by Noel Brinkerhoff, AllGov)
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