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Economy in Brief

U.S. Budget Deficit's Decline Continues
by Tom Moeller  October 16, 2014

The Federal Government posted a $483.4 billion budget deficit during all of FY 2014. It was the smallest deficit since 2008. For FY 2015, the Congressional Budget Office projects the budget deficit will total $469 billion then rise to $556 billion in FY 2016.

Net revenues for FY 2014 increased 8.9% y/y with the firmer economy. Corporate income taxes increased 17.3% y/y while the improved labor market raised social insurance taxes by 8.0% y/y. Individual income taxes continued to rise an improving 5.9% y/y and excise taxes gained 11.1%.

The smaller budget deficit in FY'14 also reflects a reduced 1.4% y/y increase in net outlays. Outlay growth was held back by a 4.7% y/y reduction in defense spending and a 4.3% y/y decline in income security outlays. To the upside, spending growth was boosted this year by an accelerated 14.2% y/y jump in health outlays, which include health services, research & training, and an 7.7% y/y rise in veterans benefits. Also increasing were social security outlays which gained a stable 4.6% y/y while Medicare spending increased 2.8% y/y. Reflecting the recent rise in interest rates, net interest payments rose 3.0% y/y.

Haver's basic data on Federal Government outlays and receipts are contained in USECON. Considerable detail is given in the separate GOVFIN database.

 US Government Finance FY'14 FY'13 FY'12 FY'11
Budget Balance -- $-483.4 bil. $-680.3 bil. $-1,089.2 bil. $-1,296.8 bil.
  As a percent of GDP -- 2.8 4.1 6.8 8.4
% of Total
Net Revenues (Y/Y % Change) 100 8.9% 13.3% 6.4% 6.5%
  Individual Income Taxes 47 5.9 16.3 3.7 21.5
  Corporate Income Taxes 10 17.3 12.9 33.8 -5.4
  Social Insurance Taxes 34 8.0 12.1 3.2 -5.3
  Excise Taxes 3 11.1 6.3 9.2 8.2
Net Outlays (Y/Y % Change) 100 1.4 -2.4 -1.7 4.1
  National Defense 18 -4.7 -6.3 -3.9 1.7
  Health 10 14.2 3.1 -7.0 1.0
  Medicare 14 2.8 5.5 -2.8 7.5
  Income Security 16 -4.3 -1.1 -9.1 -4.1
  Social Security 24 4.6 5.2 5.8 3.4
  Veterans Benefits 4 7.7 11.5 -2.0 17.3
  Education, Training, Employment & Social Services 3 25.9 -21.9 -10.3 -20.6
  Interest 6 3.0 0.4 -3.0 15.8
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