WASHINGTON (AP) — The U.S. budget deficit in 2015 fell to its lowest level in eight years, spurred by gains in tax revenue that outpaced greater government spending.
The Treasury Department said Thursday that the deficit in the just-completed 2015 budget year fell to $439 billion from $483 billion in 2014. It is equal to 2.5 percent of the economy, the smallest proportion since 2007, and below the average of the past 40 years.
The latest figures coincide with intensifying budget battles in Washington. Congress and the White House face an early November deadline to raise the nation's borrowing limit. Lawmakers are seeking a separate agreement with the Obama administration on a budget to keep the government open past a Dec. 11 deadline.
The past few years' dwindling budget gaps are a sharp contrast to the ballooning deficits that emerged during the Great Recession. Government spending surged and tax revenue sank as 9 million Americans lost jobs, the number of people relying on unemployment benefits and other social programs soared and banks and automakers needed bailouts.
Those trends raised annual deficits above $1 trillion for the first four years of Obama's presidency. In 2009, the deficit equaled nearly 10 percent of the economy, the largest proportion since World War II.
Since then, a slowly improving economy and annual spending caps agreed to in a 2011 budget deal have steadily reduced the deficit. It has declined for six straight years when measured as a percentage of the economy.
Roughly 2.8 million jobs were added in the 12 months that ended in September. Corporate profits also rose, boosting the government's tax receipts.
Revenue rose 8 percent in 2015 to $3.25 trillion and spending 5 percent to $3.69 trillion.
Americans paid 6 percent more in income and Social Security taxes in 2015 compared with a year earlier. Corporate tax receipts rose 7.2 percent.
Health care programs drove some of the largest increases in spending. Medicaid, which pays for health services for the poor, reported expenses of $350 billion, 16 percent higher than in 2014. Much of that increase was attributable to greater enrollments under the Obama administration's health care reforms.
Education spending jumped $30 billion, or 51 percent, driven by an increase in the financing of student loans.
Earlier Thursday, Treasury Secretary Jacob Lew warned Congress that the government would bump up against its $18.1 trillion borrowing limit by Nov. 3, two days before an earlier estimate.
Lew's warning comes as closely held talks on the budget have yielded little evidence of progress. Some Republicans hope to win concessions in exchange for an increase in the debt limit, a prospect that is considered unlikely.
AP Writer Andrew Taylor contributed to this report.