The final FY2013 federal budget deficit was $680 billion, down $409 billion (38 percent) from the FY2012 deficit of $1.089 trillion. This significant drop in the deficit resulted from higher revenues (+$325 billion) and a decrease in government spending (-$84 billion). The marks the first year the budget deficit has been below $1 trillion since FY2008 when it was $458 billion.
Data on government expenditures and receipts and the deficit are reported in the Monthly Statement of Receipts and Outlays of the United States Government (MTS) prepared by the Treasury Department.
When measured as a percent of Gross Domestic Product (GDP), the FY2013 deficit dropped to 4.1 percent from 7 percent reported for FY2012. This is the lowest the deficit share of GDP since FY2008 (3.2 percent).
Commenting on the deficit figures, Sylvia Burwell, Director of the Office of Management and Budget, said in an OMB blog post that the significant deficit reduction is due to a number of factors “including a stronger economy, the expiration of certain tax cuts for high income Americans, and spending reductions like those achieved from the troop drawdown in Afghanistan.”
Revenue growth in FY2013 was led by a 16 percent increase in individual income tax receipts (+$184 billion). Corporate income taxes rose 13 percent (+$31 billion) and social insurance and retirement receipts increased by 12 percent (+$103 billion).
A $43 billion decline in Department of Defense spending accounted for half of the decrease in federal outlays in FY2013. Lower spending on unemployment benefits and the automatic spending cuts (sequestration) required in the Budget Control Act also contributed to lower total spending.