NEW YORK (CNNMoney)
The
federal budget deficit just keeps getting smaller.
It fell sharply in
2014 -- its fifth consecutive annual decline.
That's according to
an estimate Wednesday by the Congressional
Budget Office. The deficit for fiscal year 2014, which ended on
Sept. 30, will come in at roughly $486 billion, the CBO said. The Treasury
Department will report the official number in a few weeks.
The 2014 number is
$195 billion less than a year earlier. And as a share of the economy, the
deficit dropped to 2.8% of GDP from 4.1% last year.
The deficit is the
gap between how much the government spends and how much it takes in over the
year. It borrows to make up the difference.
The biggest reason
for the slide: An improving economy, higher
taxes, and continued spending restraint.
Revenue grew by 9%
over the prior year, or by $239 billion. That growth was fueled largely by a 7%
jump in income and payroll tax receipts combined. Corporate tax revenue
rose by 18%.
Spending, meanwhile,
only grew by 1% over 2013. The bulk of that growth came from mandatory
spending, which Congress doesn't vote on annually. Spending on Social Security benefits went
up 5% and Medicare spending
rose 2.7%. Medicaid spending
jumped nearly 14%, primarily because of health reform provisions
that went into effect in January 2014.
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