Significant drop in US budget deficit

The deficit in 2014 was just under three per cent of gross domestic product, using the most recently available figures for the size of the economy.

Reflecting revival of the US economy, the country's budget deficit has dropped by $72 in 2014 than the previous year, according to a report.

Capped off by a $2 billion surplus in December, the government ended the calendar year with a deficit of $488 billion, $72 billion less than the 2013 tally, The Wall Street Journal reported based on the data from the US Treasury.

The federal government uses a fiscal year that begins in October; on that basis, the 2014 fiscal year ended in September saw a deficit of $483 billion, the lowest of Barack Obama's presidency, it said.

In 2014, the US racked up its smallest budget deficit since 2007, marking an economic shift of fortunes, it added.            

"The improvements in the short-term deficit are positive, and importantly, reflect the improving economy," Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, told the journal.

"But the longer-term debt situation remains unsustainable, and policy makers should not take the short-term respite as an excuse to hide from these issues," MacGuineas said.

According to the daily, though still large in absolute terms, government spending and deficits have both decreased dramatically since 2010 as a share of the nation's economy.

The deficit in 2014 was just under three per cent of gross domestic product, using the most recently available figures for the size of the economy.

That's below the average since the 1980s, it said.

The hysteria and crisis that surrounded the discussion in 2010 and 2011 have thankfully dissipated, said Joel Friedman, the vice president for fiscal policy at the Center for Budget and Policy Priorities, and a former Democratic staffer on the Senate Budget Committee.

Friedman said that lawmakers have an opportunity to focus on near-term priorities such as infrastructure, education or national security, and no longer worry only about slashing spending.

Image: New York's Statue of Liberty. Photograph: Reuters