By Lauren Pratt |Staff Writer|
The US deficit was reported the lowest since 2007, recorded by the Treasury Department according to CNN Money.
Sept. 30. marks the end of the US government’s fiscal year (FY), a period used for calculating yearly financial statements in business affairs around the world.
Though a positive outcome, reports show government outlays (an amount of money spent on an item) had increased.
The US deficit is the amount by which the government’s total budget outlays exceeds the quantity set to spend that fiscal year.
In 2007, the federal deficit was only $161 billion, a considerably good year opposed to those following when it increased to the highest peek of $1,400 billion.
The deficit in FY 2015, according to The Treasury Department, totaled $439 billion a positive for the country.
However, the problem lies in government spending totaling $3.69 trillion and revenue at $3.25 trillion.
The total is greater than 2014’s revenue percentage, though the US debt continues to increase.
Reinforced by an improving job market, the increase in revenue and decrease in deficit is largely due to individual income taxes rising nearly 11 percent, payroll taxes up six percent, and corporate taxes up by seven percent.
The government also cut spending in homeland security, transportation, agriculture, and interest payments on the country’s debt, as reported by the website for the Committee for a Responsible Federal Budget.
CSUSB Economics Professor Dr. Thomas Pierce stated that “you can have a situation where the US budget deficit gets smaller but the government is actually spending more money.”
To illustrate this point, Pierce used a hypothetical situation. His example stated, in 2014 the revenue (taxes) can be $600 billion, while spending (receipts) is $800 billion.
This leaves the federal budget deficit (the difference) for that year totaling $200 billion.
For 2015, the revenue was $775 billion, spending at $900 billion, and budget deficit at $125 billion.
From 2014 to 2015, the revenue and spending had increased, which lead to the deficit decreasing, but the lower deficit still adds to the overall debt of the country.
Many economist claim that the lower deficit can be a negative effect on the country.
Pierce thinks “that for the federal government this size budget deficit relative to GDP, is a range that is considered good and not a problem for the economy.”
With deficits decreasing and debt rising, the feeling of uncertainty about the US’s economic future has echoed among US citizens and government officials.
As Federal Reserve chairman Ben Bernake said, “to achieve economic and financial stability, US fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable, or preferably declining overtime.”
“Although the deficit has decreased during Obama’s presidency, more must be done to ensure that our country remains financially stable…our economic future is bleak because the government would chose not to make interest payments on the national debt,” said CSUSB student Jessica Williams.
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