The federal government’s budget deficit has fallen to $483.4 billion, its lowest level during President Barack Obama’s presidency, the Treasury Department said Wednesday. Obama inherited a trillion-dollar-plus deficit in 2008 after the financial crisis, but as the economy has improved, more tax revenue and lower government spending has reduced the deficit, which peaked at $1.4 trillion in 2009 (last year’s deficit was $680 billion).
The 2014 deficit for the month ending Sept. 30 is about 2 percent of gross domestic product (GDP), which economists say is sustainable. The figures are lower than an estimate released last week by the Congressional Budget Office (CBO), which estimated that the deficit fell to $486 billion and 3 percent of GDP.
Dean Baker, co-founder of the Center for Economic and Policy Research, said reasons for the shrinkage include higher tax collections largely from capital gains in the stock market, a rapid drop in unemployment that’s lowered welfare transfers and health care costs below expectations.
The falling deficit could give Democrats a positive talking point on the campaign trail for midterm elections next month. Republicans have often argued that government spending is too high.
The CBO warned that the deficit could rise again without reform to Social Security and Medicare benefits.