The incredible shrinking deficit

There are still quite a few politicians who claim, just a matter of course, that in the Obama era, the United States runs “a trillion-dollar deficit every year.” It’s clearly time for them to update their talking points.

Closing the books on a fiscal year in which the federal budget deficit fell more sharply than in any year since the end of World War II, the Treasury Department reported on Thursday that the deficit for 2013 dropped to $680 billion, from about $1.1 trillion the previous year.

In nominal terms, that is the smallest deficit since 2008, and signals the end of a five-year stretch beginning with the onset of the recession when the country’s fiscal gap came in at more than $1 trillion each year. As a share of the nation’s economy, the budget deficit fell to about 4.1 percent, from a high of more than 10 percent during the depths of the Great Recession.

The sharp reduction in the deficit last year was boosted in large part by increased government revenue. At the start of the year, the wealthiest taxpayers began paying slightly higher taxes – a policy Republicans said would slow the economy and cause lower federal receipts. We now know GOP policymakers had it backwards: “The Treasury said revenue climbed $324 billion, to $2.8 trillion, from 2012 to 2013. That is growth of around 12.9 percent, reflecting both higher income tax rates and the strengthening economy.”

But congressional Republicans – the folks who had no qualms about rising deficits during the Bush/Cheney era – continue to insist deficit reduction must take priority over pressing national needs. Yesterday, GOP senators went so far as to block a bill on expanded veterans’ benefits, partly out of fears the proposal might increase the deficit a little.

Read more at The MaddowBlog

“Everyone is entitled to his own opinion, but not to his own facts.”
– United States Senator Daniel Patrick Moynihan