According to a recent report by the Congressional Budget Office, the nation’s deficit is shrinking. From the fiscal year 2013 to 2014, the deficit dropped from 4.1%to 2.8%of GDP. In hard numbers, America went from $675 billion in debt to roughly $480 billion. This decline is attributed to an improving economy, higher taxes and continued spending restraint.opens IMAGE file
A closer look at the numbers revealed that although spending only grew by one percent over 2013, revenue grew by nine percent over the previous year. The jump in revenue was fueled by an increase in income and payroll tax receipts combined with an 18% growth in corporate tax revenue. Most of the spending growth came from mandatory spending. Medicaid spending increased by 14%, Medicare rose 2.7% and Social Security benefits jumped up five percent.
Spending increases were mostly counterbalanced with cuts in defense and domestic programs. Department of Housing and Urban Development fell 31%, and defense spending dropped by five percent. In addition, unemployment benefits dropped by 34%. Over the past several years, government officials have only passed tax and spending measures that didn’t add to the troubling increasing deficit. However, with the current increase of geopolitical issues, lawmakers are considering reversing the budget cuts for defense.
Despite the decrease in the deficit, the nation’s debt remains a concern for many and for good reason. Major entitlement programs like Medicaid and Medicare are projected to shoot up over the next two decades. According to the pundits, revenue won’t be able to keep up. These factors will drive the federal debt up faster than the economy. The Congressional Budget Office states that this trend could not be sustained. It would cause the government to have to borrow much more money and pay more interest on debt. The end result would be that American’s financial well-being goes south.
Although the nation’s deficit has decreased from 2013 to 2014, a watchful eye is still needed.