A boost in tax revenue led to a drop in the deficit, according to reports released by the Treasury Department. The fiscal year for 2014 ended at the end of September, making October 1 the first day of fiscal year 2015. The increase in revenue — nine percent over fiscal year 2013 — came as a result Bush-era tax benefits for the rich ending, as well as increased economic activity from the drop in unemployment.
The deficit now stands at $483.35 billion, the lowest since 2008. And in even better news, increases in GDP mean the deficit currently stands at 2.8 percent of GDP. Why is that good news? Well, as put by Shaun Donovan, the Secretary for Housing and Urban Development, “This is not only a reduction of the deficit, it’s also a return to fiscal normalcy.”
And he’s right — the deficit, as a percentage of GDP, is currently lower than the average over the last four decades. That covers several Republican administrations, including Ronald Reagan, George W. Bush, and George H.W. Bush. In other words, the next time you hear conservatives blathering on about the deficit, remember they’re doing nothing but fear-mongering and trying to score political points.
Unfortunately for the right wing, this news means that “fiscal conservatism” will mean less on the campaign trail. There will be less urgency in Washington to slash programs, and more willingness among Democrats to stand up and fight for the social safety nets so many Americans depend on.
It’s hard to say what’s going to happen in the next few years with regard to the budget. Baby boomers are rapidly retiring and taking up more healthcare resources, and short-term budget cuts to help close the deficit may adversely impact the long-term economy, once again causing the federal government to have to pick up the slack. However, too much depends on the elections this year, and in 2016, to know for certain what the future holds. For now, let’s take it for what it is — another Republican talking point biting the dust.