WASHINGTON (AP) — The federal government ran a lower budget deficit this August than a year ago, remaining on track to record the lowest deficit for the entire year since 2008.
The August deficit was $128.7 billion, down 13 percent from the $147.9 billion deficit recorded in August 2013, the Treasury Department said Thursday in its monthly budget report.
With just one month left in the budget year, the deficit totals $589.2 billion, 22 percent below last year's 11-month total.
The Congressional Budget Office expects the government to run a sizable surplus in September that will allow the government to close out the budget year with a deficit of $506 billion, the lowest since 2008.
The improvement this year has occurred because of a 7.7 percent increase in tax revenues that offset a smaller 0.8 percent increase in spending. Revenues have been boosted by an improving economy and a tax increase that started taking effect in January 2013 that raised taxes on upper income individuals and eliminated a tax break workers had been getting on their Social Security taxes in the aftermath of the Great Recession.
On the spending side, outlays have been restrained by efforts to get control of soaring budget deficits and by an improving economy which has cut spending in such areas as unemployment benefits and food stamps.
With one month remaining in this budget year, outlays total $3.25 trillion while revenues total $2.66 trillion.
If the deficit comes in at $506 billion as CBO is forecasting, that would be 26 percent below last year's imbalance and the lowest annual total since the 2008 deficit of $458.6 billion.
The 2007-2009 recession and efforts to deal with the financial crisis sent deficits soaring above $1 trillion for four straight years. The deficit hit $1.4 trillion in 2009 and remained above $1 trillion for each of the next three years, finally falling to $680.2 billion last year.
The CBO's latest forecast, released last month, sees the deficit declining to $469 billion next year before starting to rise again. The CBO forecast has the deficit climbing above $800 billion in 2021 and above $900 billion in 2022 and beyond. The big driver of those deficits will be the rising cost of Social Security and Medicare for the 78 million retiring baby boomers.
Republicans blame President Barack Obama for failing to propose significant cuts to reduce soaring entitle costs. Democrats counter that Republicans would rather slash needed government benefit programs than impose higher taxes on the wealthy.
Neither side has shown any desire to make major concessions in this congressional election year.
Republicans controlling the House have unveiled a short-term spending bill that would keep the government open until Dec. 11. That would buy time to negotiate a catchall, $1 trillion-plus spending bill after the November midterm elections.
There is little expectation that there will be a repeat of last year's tea party uprising when conservatives forced a budget standoff over implementing the new health care law that sparked a 16-day partial government shutdown.