US Fiscal Deficit Falls to USD1.3 Trillion

by Mike Godfrey, Tax-News.com, Washington

19 October 2010

United States Treasury Secretary, Tim Geithner, and Office of Management and Budget Acting Director, Jeffrey Zients, have released details showing that the federal government’s deficit in the fiscal year (FY) 2010 was almost USD1.3 trillion, 9% less than in FY 2009.

As a percentage of gross domestic product (GDP), the deficit in the year to end-September 2010 fell to 8.9%, down from 10.0% of GDP in FY 2009.

In making the announcement, both Geithner and Zients underscored the Administration's commitment to getting Federal finances back on a sustainable path. The former stressed that “we still have a long way to go to repair the damage to the economy and address the long-term deficits caused by the crisis."

It was explained that the decline in the deficit from last year was due to a combination of higher revenues and lower expenditure. The turnaround in receipts, after two years of decline, was partly due to higher corporation income tax receipts. That increase was, however, partially offset by a decline in individual income and payroll tax receipts.

Government receipts totalled USD2.162 trillion in FY 2010, an annual increase of 2.7%. As a percentage of GDP, receipts remained unchanged at 14.9%.

Despite the decrease in the overall deficit, the Congressional Budget Office noted that, relative to the size of the economy, the FY 2010 deficit was the second-highest shortfall - and FY 2009 the highest - since 1945.

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