The Federal Debt Is … Shrinking?

Although the U.S. debt is still outrageously high, a surplus is expected to be achieved over the course of this second quarter.  Tax revenue is higher than projected, and spending, as a result of the sequester, is down.  Unfortunately, the surplus won’t last for long, as the second quarter is generally the best of the year for balancing the budget.  The Treasury Department has predicted the borrowing of $223 billion in the third quarter.

Overall, we are seeing an improvement in fiscal policy.  The budget deficit as a share of gross domestic product fell from 10.4% to 6.7% between 2009 and 2012.  At that pace, it should fall to 3.7% in 2015.  Therefore, while the government has not completely solved the country’s debt problems, it is on the right track.  The fact that this should be the first quarterly surplus for the U.S. since 2007 speaks volumes about the progress we’ve made since the 2008 economic crisis.

Written by: Constantine Kostikas

Source: Businessweek.com

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