Earlier this month, CBO issued its budget review for fiscal year 2013, which ran October 1, 2012 through September 30, 2013. With total outlays for the fiscal year reaching $3.45 trillion and total revenues of $2.8 trillion, the annual deficit was $680 billion, or $409 billion less than 2012. This is the first time since 2008 the federal deficit fell below $1 trillion. Over the last five years, the President has borrowed $5.7 trillion, “more than the entire gross federal debt as recently as the year 2000. Debt held by the public as a share of GDP has nearly doubled in those five years to 76 percent from 40 percent in 2008.”
What Were CBO’s Key Findings?
- Revenues increased in fiscal year 2013, for the fourth year in a row, reaching $2.8 trillion, or 16.7 percent of GDP. This is thirteen percent more than revenues generated in 2012 and eight percent above revenue’s peak in 2007.
- Net spending was $84 billion less in 2013 than in 2012, lower than outlays in any year since 2008. Spending in fiscal year 2013 was 20.8 percent of GDP, less than 24.4 percent and 22 percent of GDP in 2009 and 2012 respectively, but still above the 40-year average of 20.4 percent.
- Combined spending for the three largest entitlement programs increased to 9 percent of GDP in 2013. Social security outlays increased by $40 billion; outlays for Medicare increased by $11 billion; and outlays for Medicaid increased by $15 billion.
What does it Mean?
- For the first time since the Korean War, total federal spending fell two years in a row. Outlays fell from $3.6 trillion in 2011 to $3.54 trillion in 2012 to $3.45 trillion in 2013.
- While progress was made in 2013, an anemic recovery continues to hamper economic growth. As the chart below reveals, the current recovery lags significantly behind previous recoveries – leaving a growth gap of more than $1.3 trillion.