U.S. Deficit Declines At The Fastest Sustained Pace Since World War II

The Obama administration was in an upbeat mood last week as news report shows that the federal budget deficit dropped to $483 billion last year, the lowest level as a share of the economy since 2007 and at the fastest sustained pace since World War II.

Driven by a growing economy, smart spending cuts, and higher tax revenues, the deficit was cut by two-thirds over the last five years.

The Office of Management and Budget and the Treasury Department announced that the deficit has fallen to 2.8 percent of Gross Domestic Product (GDP); last year’s deficit also shows record level of deficit reduction, two years better than the goal anticipated by the White House.

In a news briefing, Treasury Secretary Jack Lew and White House budget director Shaun Donovan lauded the year-end numbers, stating that the good news comes at a time when government spending has risen slightly and Washington has abandoned “harmful excessive budget austerity,” Donovan noted.

Treasury Secretary Jack Lew also said, “What I don’t think we have is an emergency right now … The challenge we have is to sustain the economic engine.”

The nation’s debt which remains precariously high at $17.8 trillion still needs a lot of work to be brought down to a more reasonable level both men were quick to point out.

According to a Reuters report, the Congressional Budget Office has forecast a $469 billion deficit for fiscal 2015, which started on Oct. 1. It expects deficits to rise again later this decade as costs associated with an aging population mount.

“A nearly $500 billion deficit is nothing to celebrate,” said a spokesman for House Budget Committee Chairman Paul Ryan, a Republican who has been touted as a possible 2016 presidential candidate. “And CBO still projects that, in the coming years, the deficit will rise even higher to unsustainable heights.”