Updated 10:45 a.m. ET
The federal budget deficit is projected to drop in fiscal year 2014 to its lowest level since President Barack Obama took office, according to the Congressional Budget Office.
CBO projects the federal deficit will fall from $680 billion in fiscal year 2013 to $514 billion in fiscal year 2014.
Federal revenues are expected to increase by 9 percent in 2014, to $3 trillion, while spending will increase 2.6 percent to $3.5 trillion — both in line with the 40-year average.
Expiring tax cuts for businesses and an expiring cut to the Social Security payroll tax, along with an improving economy, account for the boost in revenue. The increase in spending is attributed largely to higher spending on programs like Social Security, Medicare, and Obamacare.
The federal deficit was a record $1.4 trillion in fiscal year 2009, when Obama took office.
The subsequent years have seen a concerted effort to cut the deficit; the debate has largely centered on by how much. After the GOP took control of the House in the 2010 midterm election, the pro-austerity crowd has largely won the debate in Washington, with the automatic budget cuts known as sequestration, passed by Congress and signed by the president, cutting federal spending by $1.2 trillion over the next decade.
That austerity has come with a price: CBO previously projected that the sequestration cuts would result in 1.6 million fewer jobs by the end of fiscal year 2014 and cut 0.7 percent off the national gross domestic product.