The federal budget deficit has fallen to $483 billion, a high number that may only be considered low following record high deficits in the past six years.
In a statement announcing the reduction, Treasury Secretary Jack Lew praised President Obama, boasting that his policies and a strengthening U.S. economy have reduced the deficit at the quickest rate since World War II.
The 2008 crisis led to the highest deficits as a percentage of the economy on record since 1946 — in 2009 the deficit was nearly 10 percent of GDP. Federal spending also surged to 24.4 percent of the economy during President Obama’s first year in office.
Since last year, the deficit has gone from about 4 percent to 2.8 percent of GDP, which is below the post-World War II average of about 3 percent.
“The President’s balanced approach to deficit reduction has made our tax code more fair, reduced spending and made critical investments to help drive U.S. competitiveness and growth,” Lew said.
The CBO predicted this would be the case, and projects the deficit will remain close to 3 percent of GDP through 2018. But by 2022 the deficit is expected to return to about 4 percent of GDP.
The federal debt, which is 74 percent of GDP this year, is also expected to rise. By 2024, it’s projected to hit 77 percent of GDP — the highest percentage in U.S. history, aside from a time around World War II.
If laws aren’t changed, federal debt is on an upward trajectory that is ultimately unsustainable, according to the CBO.
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