Government Posts Smaller Budget Deficit Over-the-Year
The U.S. government has reported a smaller budget deficit compared to August 2012 and is on track to shrink to its lowest level in five years. The August 2013 deficit was $147.9 billion, bringing the annual budget gap to $755 billion; 35 percent lower than at the same time last year. The Congressional Budget Office projects a budget surplus for September, lowering the deficit to $642 billion, the first sub-$1 trillion deficit in five years. The slow but steady growth of the economy has resulted in more people returning to work and corporate profits rising while Social Security taxes rose and tax rates increased on wealthy Americans, raising tax revenue throughout the year. The federal government collected $185 billion in taxes in August, rising 4 percent over-the-year. Government spending cuts have also lowered spending by 10 percent over-the-year, sinking to $333 billion. The shrinking deficit has not made it easier for Congress to agree on spending and taxes for the coming years and the government is facing a partial shutdown if an agreement is not made by October 1. House Republicans have threatened to force such a shutdown in order to work to defund the healthcare reform law. The government’s borrowing limit is also in the midst of a Congressional stalemate and will be reached by mid-October, which could lead to an inability for the government to pay its bills.