Federal Deficit Falls At Fastest Rate Since World War II   Leave a comment

Next time deficit scolds tell you we need to keep cutting and cutting federal expenditures – never mind their effect on the economy – remind them that the federal budget is already heading in that direction

The federal budget deficit fell faster last year than in any year since the end of World War II, according to a Treasury Department report on Thursday. It declined from $1.1 trillion in 2012 to $680 billion in 2013.

That represents the smallest deficit since 2008 in nominal terms. It’s now 4.1 percent of GDP, dropping from a high of more than 10 percent during the depths of the recession. It’s less than half of what it was in 2009, when the recession ended.(Think Progress)

Image

(Image credit: New York Times)

2 factors are driving the above deficit decreases: higher tax revenues and austerity measures passed over the past few years, resulting in the sharpest decline in federal deficits since World War II…which is all good & well except for the simple fact that had austerity not become the watchword of the day amongst the chattering classes of Washington:

…without the deep spending cuts, the health of the economy would look much better. There would have been 2.4 million additional jobs since 2010. The deficit would have improved even faster without last year’s automatic sequestration cuts, which are still continuing for many programs.(Think Progress)

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