Federal Deficit Shrinking Faster Than Expected

The deficit is on track to fall below where is was when President Obama took office.

The federal deficit is shrinking more quickly than expected, and the government’s long-term debt has largely stabilized for the next decade, the Congressional Budget Office said Tuesday in a report that could strengthen the Obama administration’s hand in the budget battles with congressional Republicans.

The budget office continues to say the federal government faces a long-range budget problem — mostly caused by the costs of an aging population — but its new forecast pushes the crunch point for that problem off into a considerably more distant future: well after the 2020 presidential election.

The deficit projection for this year — $642 billion — is almost 25% less than the deficit the budget office had forecast as recently as February. At the new level, the annual deficit would be back to where it was before President Obama took office. It would continue to fall for the rest of Obama’s tenure, the budget office now projects. By contrast, the deficit for fiscal year 2012 came in at just over $1 trillion.

This is all because of higher taxes, and improving economy, and the slowing down of medical inflation which reduces the costs of Medicare and Medicaid.

By: Cheston Catalano

Cheston Catalano is a Kentucky-based journalist whose work has been featured in the Chattanooga Times Free Press and the Clarksville Leaf Chronicle. He is a long-time contributor to Liberaland.