Ahead of the Bell: US budget deficit

With 1 month remaining in budget year, US deficit on track to drop to lowest level in 6 years

Associated Press
Ahead of the Bell: US budget deficit
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FILE - This March 27, 2009, file photo shows the Treasury Building in Washington. The Treasury Department releases federal budget data for June on Friday, July 11, 2014. (AP Photo/J. Scott Applewhite, File)

WASHINGTON (AP) -- The Treasury Department releases the budget deficit for August. The report will come out at 2 p.m. EDT Thursday.

LOWER DEFICIT: The Congressional Budget Office expects the deficit for August to total $129 billion, down 12.8 percent from August 2013.

LESS RED INK: The government is on course to record the lowest deficit in six years. With one month left in this budget year, the CBO forecasts the deficit for the full year will total $506 billion, down 26 percent from last year.

That would be the lowest deficit since 2008 when the imbalance was $458.6 billion, which was a record at the time.

The Great Recession and efforts to deal with the financial crisis sent deficits soaring above $1 trillion for four straight years. The deficit hit $1.4 trillion in 2009 and remained above $1 trillion for each of the next three years, finally falling to $680.2 billion last year.

The CBO's latest forecast, released last month, sees the deficit declining to $469 billion next year before starting to rise again. The CBO forecast has the deficit climbing above $800 billion in 2021 and above $900 billion in 2022 and beyond. The big driver of those deficits will be the rising cost of Social Security and Medicare for the 78 million retiring baby boomers.

Republicans blame President Barack Obama for failing to propose significant cuts to reduce soaring entitle costs. Democrats counter that Republicans would rather slash needed government benefit programs than impose higher taxes on the wealthy.

Neither side has shown any desire to make major concessions in this congressional election year.

Republicans controlling the House have unveiled a short-term spending bill that would keep the government open until Dec. 11. That would buy time to negotiate a catchall, $1 trillion-plus spending bill after the November midterm elections.

There is little expectation that there will be a repeat of last year's tea party uprising when conservatives forced a budget standoff over implementing the new health care law that sparked a 16-day partial government shutdown.

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