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Shrinking U.S. Budget Deficit - 7/27/15

The U.S. budget deficit shrank by 52 billion dollars, or fourteen percent during the first nine months of the twenty fifteen fiscal year versus one year ago figures according to the Congressional Budget Office.  Due a combination of a strengthening economy and public policy, tax receipts have been expanding faster than spending increases. 

As reported by Reuters, individual income taxes were up one hundred and fifty three billion dollars over a year ago, with a substantial sixteen percent gain in the category that includes tax payments for stock market gains.  The Congressional Budget Office projects that for fiscal year twenty fifteen, the federal budget deficit will equal two point seven percent of GDP.  While that’s still a large shortfall, it represents a much smaller percentage than the recent peak of nearly ten percent in two thousand and nine. 

While the deficit’s share of gross domestic product may continue to decline in the near-term, a combination of an aging population and rising healthcare costs could push the deficit higher over the next decade.  The Congressional Interest rates also expects interest rates to rise, pushing government interest payments higher.  A decade from now, the federal budget deficit is expected to approach four percent of gross domestic product.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.