(WASHINGTON) — The budget deficit will shrink to $642 billion in fiscal year 2013, its lowest level since 2008, according to the Congressional Budget Office.
Issues like an aging population and ballooning medical costs likely remain a threat for the long-term deficit, but at least in the short term things are looking quite a bit better than expected.
CBO’s current deficit estimate is $200 billion below what it estimated in February of this year.
Among the factors contributing to this better outlook is the improving housing market. Better-than-expected bailout repayments from the government-controlled housing agencies Fannie Mae and Freddie Mac helped the country’s finances.
Another reason was a change in tax laws in January 2013 leading to higher taxes on upper-income households.
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Madison Park, Keith Allen and Andreas Preuss, CNN