U.S. budget deficit narrows to 5-year low

WASHINGTON — The U.S. posted its smallest budget deficit in five years as employment gains helped propel revenue to a record.

Spending exceeded receipts by $680.3 billion in the 12 months ended Sept. 30, the narrowest gap since 2008, compared with a $1.09 trillion shortfall in fiscal 2012, the Treasury Department said Wednesday in Washington. In September, the U.S. recorded a $75.1 billion surplus, little changed from the surplus in the same month a year earlier.

Stronger hiring has helped reduce the country’s deficit as a share of gross domestic product by more than half in the past four years, narrowing it from a record $1.42 trillion in 2009. Bolstering revenue this year were higher payroll taxes Congress allowed in January, while spending growth has been limited by across-the-board cuts known as sequestration that lawmakers failed to prevent in March.

“We’ve made a lot of fiscal progress in the U.S. because of the sequester cuts, tax rates going back to historic norms and the economy improving,” said Bricklin Dwyer, an economist at BNP Paribas in New York. “Politicians have, thus far, avoided the most difficult choices — addressing unsustainable spending on entitlements such as Medicare and Medicaid.”

Revenue jumped 15.2 percent to $301.4 billion in September from a year earlier, bringing the annual figure to $2.77 trillion, Wednesday’s report showed. Spending increased 21.5 percent to $226.4 billion last month, contributing to a 12-month total of $3.45 trillion, it showed.

The unemployment rate fell to an almost five-year low of 7.2 percent in September, the Labor Department reported last week. Payrolls have grown by 1.6 million workers so far this year.

“Our deficits are getting smaller,” President Barack Obama told high school students in Brooklyn, New York, on Oct. 25, as he campaigned for his budget goals. “We don’t have to choose between growth and fiscal responsibility; we’ve got to do both.”

Congress is working toward a new budget agreement after a battle between Tea Party-allied Republicans and the Obama administration over limiting debt led to partial suspension of federal operations earlier this month.

The agreement reached after the 16-day government shutdown set a Dec. 13 deadline for budget negotiations.

The mandatory cuts don’t touch benefit payments for programs such as Social Security, Medicare and Medicaid. Many Republicans want to replace the automatic cuts with reductions in spending on these entitlement programs that account for most of the nation’s long-term debt. Democrats including Obama have indicated they’re open to some of these ideas as long as they are paired with new tax revenue, which Republicans oppose.

“Congress must build on this progress by crafting a pro- jobs and pro-growth budget agreement that strengthens the economy while maintaining fiscal discipline,” Treasury Secretary Jacob Lew said in a statement Wednesday.

The Treasury said the 2013 deficit amounted to 4.1 percent of GDP. The shortfall was forecast to be 3.9 percent of GDP this year, according to Congressional Budget Office projections last month, down from 10.1 percent in 2009.

A short-term shrinkage of annual budget deficits isn’t enough to reverse the 25-year growth of U.S. debt that requires Congress to choose among spending cuts, tax increases or a combination of both.

The CBO estimates rising spending on Medicare and Social Security will widen the deficit to 6.5 percent of GDP in 2038, greater than any year between 1947 and 2008. Economists including former Federal Reserve Vice Chairman Alan Blinder say the change in the entitlements system is necessary.

“Unless that happens, the budget deficit as a share of GDP and therefore the national debt as a share of GDP is headed off for the wild blue yonder,” Blinder said in an Oct. 17 Bloomberg Radio interview. “And that is what we need to stop.”

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Olivia Vanni / The Herald 
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County.
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County. (Olivia Vanni / The Herald)
Mukilteo mayor vetoes council-approved sales tax

The tax would have helped pay for transportation infrastructure, but was also set to give Mukilteo the highest sales tax rate in the state.

Marysville Mayor Jon Nehring gives the state of the city address at the Marysville Civic Center on Wednesday, Jan. 31, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Marysville council approves interim middle housing law

The council passed the regulations to prevent a state model code from taking effect by default. It expects to approve final rules by October.

x
State audit takes issue with Edmonds COVID grant monitoring

The audit report covered 2023 and is the third since 2020 that found similar issues with COVID-19 recovery grant documentation.

Bothell
Bothell man pleads guilty to sexual abuse of Marysville middle schoolers

The man allegedly sexually assaulted three students in exchange for vapes and edibles in 2022. His sentencing is set for Aug. 29.

Larsen talks proposed Medicaid cuts during Compass Health stop in Everett

Compass Health plans to open its new behavioral health center in August. Nearly all of the nonprofit’s patients rely on Medicaid.

District 2 candidates differ in public safety approach

Incumbent Paula Rhyne is facing challenger Ryan Crowther. The third candidate, Jonathan Shapiro, is no longer seeking the seat.

From left to right, Edmonds City Council Position 3 candidates Joseph Ademofe, Alex Newman and Erika Barnett.
Amid budget crisis, Edmonds City Council candidates talk revenue, affordability

Three newcomers are facing off for Position 3 on the council, currently held by council President Neil Tibbott.

Community members gather for the dedication of the Oso Landslide Memorial following the ten-year remembrance of the slide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
The Daily Herald garners 6 awards from regional journalism competition

The awards recognize the best in journalism from media outlets across Alaska, Idaho, Montana, Oregon and Washington.

Everett
Everett approves new fines for non-emergency lifts

The fire department will only issue fines for non-emergency lift assists at licensed care facilities, not for individuals at home calling 911.

Guns for sale at Caso’s Gun-A-Rama in Jersey City, New Jersey, which has been open since 1967. (Photo by Aristide Economopoulos/New Jersey Monitor)
After suing, WA gets carveout from Trump administration plan to return gun conversion devices

The Trump administration has agreed to not distribute devices that turn semi-automatic… Continue reading

The Wild Horse Wind and Solar Facility about 16 miles east of Ellensburg in central Washington is part of Puget Sound Energy’s clean energy portfolio. (Courtesy of Puget Sound Energy)
Megabill’s elimination of tax credits for clean energy projects could cost WA $8.7 billion

Washington households could see electricity costs increase $115 per year by 2029; 21,800 workers could lose their jobs by 2030, analysts say.

Everett mayor candidates focus on affordability, city budget in costly race

As incumbent Cassie Franklin seeks a third term in office, three candidates are looking to unseat her.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.