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Congressional Report Highlights Reduced Deficit With Looming Long-Term Problems

The Federal Deficit shrunk in 2014 by $170 billion according to the Congressional Budget Office. The report also argues that future problems with budgets may occur if federal laws relating to taxes and spending remain unchanged. The next few years look bright for the federal deficit and the labor market which will lose some slack as higher corporate profits push for expansion and the rehiring unemployed workers. The positive news comes with significant long-term risks where proactive solutions are needed. A 15% increase in spending on Medicaid and a 5% increase in Social Security are putting pressure on the budget. Revenue is expected to increase 6% for individual income tax, 8% for payroll tax and 15% for corporate taxes to help release some that budget pressure. The increased revenue and high costs will have an impact on spending priorities. Federal deficit held by the public will increase to 74% which is the highest since 1950. Additional debt held by the public will ri