For the first time in five years, the U.S. Government is spending less than $1 trillion more than it is taking in. On Wednesday, the government announced the deficit for the 2013 budget was $680.3B, down significantly from $1.09T in 2012. The narrowing was a result of higher revenue (more taxes) and less spending. Revenue climbed to $2.77T and spending fell to $3.45T. Obama set the record for a budget deficit in 2009, spending $1.4T more than the government brought in. A budget deficit of $680B is nothing to celebrate on its own, but put in context it can be celebrated as a small win for government. While this is certainly an improvement, it is still the fifth-largest deficit of all time.
The budget deficit is the gap between the government’s revenue and how much it spends. The national debt, which rose to $17.1T is how much money the U.S. government owes others in total. About 28% of national debt is owed to another arm of the federal government itself, with the largest single creditors being Social Security’s two trust funds. China is the largest overseas creditor, but it owns only about 7.6% ($1.28T) of the U.S.’s total debt. Japan owns $1.1T in U.S. debt.
Largely due to the Federal Reserve’s efforts to keep interest rates low, the U.S. government is paying historically low rates on its debt. Don’t let that soothe you too much though, even with an average interest rate on public debt of 2.43% interest alone on the national debt was about $222.75B in 2013. The interest on U.S. debt alone would rank as the 44th largest GDP in the world, ahead of Iraq, Portugal, and Ireland.