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Federal Deficit Down 32 Percent So Far in Fiscal 2014

Ingram Publishing/Thinkstock(WASHINGTON) -- A combination of more collected taxes and less federal spending has led to the nation's annual deficit dropping a whopping 32 percent from October 2012 through April 2013 compared to the same period a year earlier.

That news came Wednesday from the Congressional Budget Office, suggesting that the economic turnaround may be picking up steam.

While the deficit for the first seven months of the fiscal year was still $489 billion, it was far less than the $720 billion recorded between October 2011 and April 2012.

The CBO says tax collections were up by $220 billion over the past seven months, mostly due to increases in individual and payroll taxes.  On Jan. 1, the breaks on payroll taxes expired while the tax rate on the nation's biggest earners was boosted.

Meanwhile, spending has fallen 1.9 percent since the beginning of the 2013 fiscal year, with fewer payouts in unemployment benefits and less spent on the Pentagon, non-defense programs, housing assistance, energy programs and international assistance.

Spending on the major entitlements -- Social Security, Medicare and Medicaid -- did go up 6 to 7 percent, however.

Overall, the news means that Congress won't have to consider raising the debt ceiling until possibly as late as the beginning of fiscal 2014.

Copyright 2013 ABC News Radio

ABC News Radio