There are still quite a few politicians who claim, just a matter of course, that in the Obama era, the United States runs "a trillion-dollar deficit every year." It's clearly time for them to update their talking points.
Closing the books on a fiscal year in which the federal budget deficit fell more sharply than in any year since the end of World War II, the Treasury Department reported on Thursday that the deficit for 2013 dropped to $680 billion, from about $1.1 trillion the previous year.
In nominal terms, that is the smallest deficit since 2008, and signals the end of a five-year stretch beginning with the onset of the recession when the country's fiscal gap came in at more than $1 trillion each year. As a share of the nation's economy, the budget deficit fell to about 4.1 percent, from a high of more than 10 percent during the depths of the Great Recession.
Note, this points to the deficit for the 2013 fiscal year. We won't know the deficit for 2014 until October, but it's projected to be even smaller.
Also keep in mind that yesterday's Treasury report confirms the preliminary projections we reported on last fall.
The sharp reduction in the deficit last year was boosted in large part by increased government revenue. At the start of the year, the wealthiest taxpayers began paying slightly higher taxes -- a policy Republicans said would slow the economy and cause lower federal receipts. We now know GOP policymakers had it backwards: "The Treasury said revenue climbed $324 billion, to $2.8 trillion, from 2012 to 2013. That is growth of around 12.9 percent, reflecting both higher income tax rates and the strengthening economy."
Regardless, deficit hawks -- a contingent I am not a part of -- have to reason to be thrilled. It may be a well-kept secret, with polls showing the vast majority of Americans assuming the deficit is growing quickly, but the reality is the United States hasn't seen this much deficit reduction, this quickly, in about 80 years.
In theory, this should matter to federal policymakers quite a bit.