According to a Treasury Department report released on Thursday, the U.S. budget deficit rose 34 percent year-over-year. In October, the budget deficit was $122 billion, while the indicator stated just $91 billion in in October 2013. However, the figure is linked to coincidental adjustments due to the budget calendar more than to an actual increase in government spending
The 2015 budget year started in October. About $41 billion in benefit payments had been registered in October, because Nov. 1 fell on a Saturday, although the spending belongs to November. Without the calendar complication, the recorded deficit would have measured just $84 billion. However, the official budget deficit of $122 billion for the previous month is the second highest since October 2011.
The number tops analysts’ expectations. Economists surveyed by the Wall Street Journal estimated the deficit at just $110 billion, while those polled by Reuters did not expect on average a deficit higher than $111.4 billion.
In fact, at $483 billion, the budget deficit for 2014 recorded its lowest level since 2008. The figure amounts for just 2.8 percent of GDP, which is lower than the average for the last decades. From this point of view, the 2014 fiscal year saw a noticeable improvement. The 2013 budget deficit represented 4.1 percent of the GDP.
Moreover, the Congressional Budget Office forecast a deficit of just $469 billion for 2015. But the nonpartisan CBO believes the deficit will go up again in 2016.
October 2014 receipts totaled $213 billion, a 6.9 percent increase compared to October 2013, but at $334 billion, the level of spending was 15.5 percent up from the same period last year.
Taxes are, as expected, one of the main debate topics between Obama and republicans. One explanation for the low budget deficit recorded in 2014 resides in lower than expected health care costs. But Obama’s deal with the Republicans involved reducing the budget of federal agencies. However, the measure taken in 2011 was coupled with another one in 2013, which involved increased taxation of the highest earners.
Further on, while Obama stresses the importance of higher taxation levels, Republicans will probably choose another path to attain a lower deficit. Now that they are in charge of the Senate, they will probably push federal spending to a lower level.