The federal budget deficit will fall to $426 billion for fiscal year 2015, the Congressional Budget Office projected Tuesday in a significant markdown of the anticipated budgetary shortfall.
That annual deficit would be the smallest of Obama’s tenure and the sixth consecutive year in which deficits have fallen as a share of economic output, well down from the trillion-dollar deficits early in his administration.
Still, it would be higher than all of the budget deficits seen under the Bush administration, except for the deficit seen in 2008, which was $458 billion.
The deficit for the current year is now expected to be less than the fiscal year 2014 deficit of $483 billion, and also $59 billion smaller than the budget office’s estimate in March.
In its updated budget estimates released Tuesday, the Congressional Budget Office, which is Congress’ nonpartisan in-house budget agency, said the improvement in the outlook was due to greater than anticipated individual and corporate tax revenues.
Altogether, tax revenues are expected to rise 8 percent to $3.3 trillion, or 18.2 percent of total gross domestic product. Federal spending will grow more slowly at 5 percent to $3.7 trillion, or 20.6 percent of GDP.
Fiscal year 2015’s deficit will be smaller than the historical average, and low enough to keep the total federal debt, which is the accumulated annual deficits, steady at 74 percent of GDP.
The CBO sees the deficit dropping again in fiscal year 2016, to $414 billion, before rising steadily for a decade. By 2025, the last year for which the office makes projections, deficits will again eclipse the $1 trillion mark. The nation’s debt will also resume growing in the later part of the decade, a situation the CBO has warned is unsustainable.
Over the next decade, the roughly $7 trillion in aggregate deficits will be about $200 billion lower, the CBO said, mostly because of markdowns in estimated interest rates that the Treasury will have to pay on federal debt and because of higher projected tax revenues.
Republican Mike Enzi of Wyoming, chairman of the Senate Budget Committee, attributed the falling deficit to spending caps put in place as part of negotiations over the federal debt ceiling.
“Today’s report from CBO demonstrates the tremendous impact the budget caps approved as part of the Budget Control Act have had on our overspending as the nation’s annual deficit forecast for 2015 will be at the lowest level in years,” Enzi said in a statement. “Our nation’s long-term debt outlook, however, is not so rosy. I would caution those who would use this report as an opportunity to take these short term-savings and push for more spending.”
