Deficit On Track to Shrink Compared to Last Year

Although budget projections had already been showing this, we now have more definitive numbers from the Treasury Department that this year's deficit will be smaller than last year's. At this time last year, the deficit through the first eight months equaled $927.4 billion compared to $844.5 billion this year.

Individual and corporate income tax revenue is on the rise, driving much of the lower deficit. Individual income tax receipts are up 4 percent over last year through a comparable period and corporate tax receipts are up 40 percent--perhaps reflecting unusually low corporate revenue last year due to the ability of businesses to fully expense equipment investments. Meanwhile, outlays have actually fallen slightly due to lower discretionary spending and spending on countercylical programs.

^{Source: Treasury Department}

Last year's deficit was $1.3 trillion and according to the Congressional Budget Office's latest projections, it will equal $1.17 trillion this year.