US deficit narrows to smallest level since 2007
The United States budget deficit has fallen to 2.5 per cent of gross domestic product, narrowing to its smallest level since 2007.
The government's deficit, which is a measure of how much the government has spent against what it raised in taxes, shrunk to $439bn (£283.6bn) in the 12 months to the end of September, from $483bn in the same period a year ago, the Treasury Department said. Last years figure gave a deficit-to-GDP ratio of 2.8 per cent.
The amount the government raised in receipts rose by eight per cent from a year ago, to $3.25 trillion, which the Treasury said was a result of "a stronger economy", as wage growth picked up and increased income tax receipts. Businesses also paid more tax as profits increased.
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Government spending meanwhile increased by five per cent to $3.69 trillion, as social security, Medicare and Medicaid – the US's three largest entitlement programmes – were highlighted as key contributors, alongside defence spending.
The economic data comes on the same day that Treasury Secretary Jack Lew – George Osborne's American counterpart – told Congress that the US could exhaust its borrowing capacity by November 3, two days earlier than was previously estimated.
Lew said in a letter: "At that point, we expect Treasury would be left with less than $30bn to meet all of the nation's commitments — an amount far short of net expenditures on certain days, which can be as high as $60bn."
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As the US finances much of its spending from debt, the feat is that a failure to increase the "debt ceiling" could trigger a default. However, for many Republicans in the US who want to see government spending scaled back in the long-term before accepting increases in government borrowing, the prospect of raising the "debt ceiling" is controversial.
September's monthly budget was a surplus of $91bn, with receipts totaling $365bn and outlays worth $274bn.