The administration trecently confirmed a bit of good news about the last fiscal year: the government borrowed substantially less than it did the year before.
But this drop, in line with a previous projection by the Congressional Budget Office (CBO), is no reason for complacency. The additional borrowing has still pushed the federal debt to well over $17.8 trillion, and the government remains on track to boost that by $7.2 trillion or more in the coming decade.
The administration trecently confirmed a bit of good news about the last fiscal year: the government borrowed substantially less than it did the year before.
But this drop, in line with a previous projection by the Congressional Budget Office (CBO), is no reason for complacency. The additional borrowing has still pushed the federal debt to well over $17.8 trillion, and the government remains on track to boost that by $7.2 trillion or more in the coming decade.
The final budget figures for Fiscal 2014, which ended Sept. 30, show the deficit at $483 billion, according to a joint statement by Treasury Secretary Jacob Lew and Office of Management and Budget Director Shaun Donovan. That figure compares to a $680 billion deficit in Fiscal 2013.
Lew and Donovan attribute the difference to higher government receipts and stable outlays. Receipts rose to 17.5 percent of GDP, up from 16.7 percent in 2013. Spending, while higher in absolute dollar terms, fell to 20.3 percent of GDP in Fiscal 2014. That is down from 20.8 percent the previous year.
The joint statement says spending “was lower than the previous year for many agencies and programs,” including the Defense Department, unemployment insurance and nutrition assistance. Higher spending, however, was again reported for Social Security, Medicare and Medicaid.
The federal deficit is projected to begin rising again soon as the population ages, entitlement spending continues to increase, and interest costs on the debt climb rapidly. In addition, special-interest subsidies and spending programs buried in the tax code continue to drain large amounts of federal revenue.
Reports this summer from the CBO and the trustees for Social Security and Medicare underscored the difficult fiscal and demographic challenges that still face the country.
The budget office said that under current law, the debt, now roughly 74 percent of GDP, would rise above 100 percent over the next 25 years and continue growing after that — “a trend that could not be sustained indefinitely.”
The Social Security and Medicare trustees, in their 2014 annual report, call for prompt legislative action because neither system “can sustain projected long-run program costs in full under currently scheduled financing.”
