Since the financial crash, the U.S. has run up extraordinary amounts of debt. Between 2009 and 2012, the U.S. ran a cumulative $5 trillion deficit. These enormous deficits were always going to recede when the nation’s economy moved closer to normalcy again; it was just a matter of time.
It is also the case that some policy decisions have reduced the near-term deficit modestly as well. The president and Congress agreed to a tax deal earlier this year that raised revenue relative to the full extension of the Bush-era tax schedule, and the spending cuts associated with the sequester have been allowed to go fully into effect in 2013. The result is that the short-term outlook is now slightly less bad that it was a year ago. The Congressional Budget Office now projects that the federal budget deficit will total $642 billion in 2013 and $560 billion in 2014. Last summer, CBO was projecting that the deficit would remain over $1 trillion in 2013 and reach $924 billion in 2014. Those earlier CBO projections assumed full extension of the Bush-era tax schedule and elimination of the spending cuts required by the sequester.
Read the full article from U.S. News & World Report.