The US budget deficit fell sharply in just-ended fiscal 2012 to $1.1 trillion, but remained at an uncomfortably high ratio to the size of the economy, the Treasury reported Friday.
The fiscal shortfall topped $1 trillion for the fourth straight year, but dropped from $1.3 trillion in 2011, as the Obama administration answered deep pressure to narrow the shortfall.
Government receipts for the year through September 30 were up 6.4 percent to $2.45 trillion, the largest gains made from higher payroll deduction returns and a better corporate tax take.
Actual spending, $3.54 trillion, was down just 1.7 percent, with some of the largest savings, $95 billion, coming from reduced interest payments on the public debt, though much of that is paid back to the government itself.
The deficit came in at 7.0 percent of gross domestic product, a level economists say is unsafe, but down from 8.7 percent of GDP in fiscal 2011.
The figures came as President Barack Obama, fighting to keep his job in next month’s election, fends off criticism from Republicans that he has been too spendthrift, piling up the national debt, and from fellow Democrats that he has been too cautious about spending to power the economy back from the deep 2008-2009 recession.
The Treasury said the Obama administration “remains committed to enacting proposals to help create jobs and promote economic growth while adopting a balanced deficit reduction package that puts the budget on a sustainable path over the long term.”
Jeffrey Zients, deputy director of the White House’s Office of Management and Budget, challenged politicians to endorse Obama’s proposed spending plans.
“Congress needs to work with the Administration to enact balanced deficit reduction that includes further spending cuts and additional revenue from asking the wealthiest to contribute their fair share,” he said in a statement.
“This deficit reduction can and must be achieved without sacrificing investments in education, infrastructure, and research and development that are so critical to creating jobs and securing our nation’s long-term economic growth and competitiveness.”
[Image via Agence France-Presse]