According to the Congressional Budget Office (CBO) the federal deficit is shrinking faster than anyone anticipated is now 24 percent lower than previous projections.
If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.
Because revenues, under current law, are projected to rise more rapidly than spending in the next two years, deficits in CBO’s baseline projections continue to shrink, falling to 2.1 percent of GDP by 2015. However, budget shortfalls are projected to increase later in the coming decade, reaching 3.5 percent of GDP in 2023, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. By comparison, the deficit averaged 3.1 percent of GDP over the past 40 years and 2.4 percent in the 40 years before fiscal year 2008, when the most recent recession began.
This isn’t necessarily a good thing if you’re someone who is still out of a job or were recently the victim of sequestration, but like most other Republican fantasies, the idea that President Obama is an unprecedented, prolific spender is completely false.
Even if House Republican hadn’t forced the nation into sequestration, the deficit would be falling quicker than anticipated at this point in time.