Submitted by Nancy Morris
For the first time in five years, the government has run a budget deficit below $1 trillion.
The government said on Wednesday, October 30, that the deficit for the 2013 budget year totaled $680.3 billion, down from $1.09 trillion in 2012. That’s the smallest imbalance since 2008, when the government ran a $458.6 billion deficit. It’s still the fifth-largest deficit of all time.
The deficit is the gap between the government’s tax revenue and its spending. It narrowed for the budget year that ended on Sept. 30 because revenue rose while spending fell. Revenue jumped 13.3 percent to $2.77 trillion. Government spending declined 2.4 percent to $3.45 trillion.
Both the Obama administrations and congressional Republicans cited their own cost-cutting efforts.
A stronger economy generated more jobs and income during the past year, which generated greater tax revenue. At the same time, the Obama administration and Congress agreed in January to end a temporary cut in Social Security taxes and also to raise income taxes on the wealthy.
The Obama administration stressed in announcing the 2013 results that the government is succeeding in reducing the deficit from record levels.
“It is now less than half of what it was when the president took office,” Treasury Secretary Jacob Lew said in a statement.
Senate Minority Leader Mitch McConnell, R-Ky., cited the bipartisan Budget Control Act of 2011, which set up the sequester.
Since then, “Washington has actually reduced the level of government spending for two years running,” McConnell said. “That’s the first time this has happened since the Korean War.”