The Congressional Budget Office is projecting that the deficit for the current budget year will decline to $514 billion. That would be the smallest imbalance in six years. The deficit last year was $680.2 billion.
Rising tax revenues from an improving economy and government spending constraints are helping to trim the shortfall.
The CBO's deficit projection for this year would represent a drop of 24 percent over the 2013 deficit and would be the smallest gap since a $458.6 billion deficit in 2008.
The deficit hit an all-time high of $1.4 trillion in 2009 and remained above $1 trillion for four straight years as a deep recession and weak recovery pinched government revenues and forced higher spending for such programs as food stamps and unemployment benefits.
The CBO's latest forecast issued earlier this month projected that the deficit will decline to $478 billion in 2015 before starting to rise again in 2016 and keep heading higher for the rest of the decade.
CBO projected the deficit would once again top $1 trillion in 2022 and remain above that level over the rest of its 10-year forecasting window. The rising deficits during this period will stem from big increases in spending on government benefit programs such as Social Security and Medicare, reflecting the retirement of baby boomers.
Through the first four months of this budget year, which began Oct. 1, government revenues total $960.6 billion, an increase of 8.2 percent from the same period a year ago. Government spending totals $1.14 trillion, down 2.8 percent from a year ago, reflecting in part across-the-board spending reductions imposed as part of the 2011 deficit agreement.
A $40 billion quarterly payment from Fannie Mae and Freddie Mac helped boost December to a $53.2 billion surplus. The next quarterly payment will come in March. An improving housing market is allowing the companies to repay their taxpayer assistance after being rescued by the government in September 2008. The companies make those payments at the end of each quarter.
Congress reached agreement in December on a budget deal aimed at bringing some stability to the budget process for the next two years. A battle over the budget resulted in a 16-day partial government shutdown in October.
And Wednesday, the Senate followed the lead of the House and passed legislation to suspend the debt ceiling until March 16 of next year. This measure will eliminate another potential flashpoint in the budget wars.
The votes came after Treasury Secretary Jacob Lew began taking extraordinary measures to avoid breaching the current $17.2 trillion debt limit. Lew had warned that Congress would only have until the end of this month to approve a new debt ceiling and avert a market-rattling default on the debt.
Many House Republicans wanted to use the need to increase the debt ceiling to extract budget concessions from the Obama administration. However, they backed away from that battle Tuesday after GOP lawmakers were unable to agree on what concession to demand from Democrats. The White House had insisted that President Barack Obama would not negotiate over the debt limit.