New Treasury Department figures confirm what the Congressional Budget Office (CBO) projected in the spring: the budget deficit for fiscal year 2013 will bedramatically lower than it was the past four years. The government recorded a $148 billion deficit in August, 22.5 percent smaller than in the same month of 2012, and is on track to total a $642 billion annual deficit when the fiscal year ends on September 30.
Days before the Treasury Department release on August revenue and spending, the CBO updated its statistics on the ratio of debt to gross domestic product. A spring report had projected debt-to-GDP ratios of 76 percent in 2014, 71 percent in 2018, and 74 percent in 2023, but the CBO now says the ratio will fall below 70 percent in 2017 and stay there for four years. Debt-to-GDP is now expected to be 71 percent in 2023 – a difference of about $500 billion in a nearly $17 trillion economy.
The looming end of the fiscal year also signals a renewed fight over spending levels for the coming year. The CBO confirmed yesterday that the spending levels Republicans have proposed violate the terms of sequestration by giving the Department of Defense $20 billion more than is allowed by the law mandating the arbitrary, damaging cuts.