CBO: The Deficit Has Shrunk Massively Over The Past Year

The federal budget deficit has fallen $220 billion in a year-over-year period, according to the latest monthly budget estimate from the Congressional Budget Office released Friday.

According to the CBO, the federal government has run a budget deficit of $627 billion over the first eight months of the fiscal year. That's almost $220 billion less than the same period — May through October — of 2012.

The CBO has not changed its overall deficit forecast, which is still projected to remain at $642 billion this year. That estimate, which came in May, was significantly down from an $845 billion projection in February.

The CBO says that the falling deficits are due to federal revenues rising by 15 percent. Meanwhile, federal spending has seen an increase of less than 1 percent. One of the main drivers of the increase in revenues is a 16 percent hike in individual income and payroll taxes — including a 10 percent increase in payroll taxes, which coincided with the expiration of the payroll tax cut in January.

The report comes at a time when there is renewed debate over fiscal austerity in the United States. The liberal Center for American Progress released a report Thursday calling for a reset to the "entire fiscal debate."

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