For the 12 months ending March, 2015, the federal budget deficit was $510 billion, up from a post-recession low of $436 billion last November, and down by almost two thirds from its record high of $1.48 trillion just over five years ago. From the looks of things, both spending and revenues are growing about 6-7% a year. If this keeps up we're unlikely to see lower nominal deficit numbers, but the deficit is likely to shrink somewhat relative to GDP as the year progresses.
The past five years were remarkable ones for federal finances: spending was relatively unchanged while revenues surged by more than 50%. Things are now reverting to their long-term trends, with spending and revenues growing 6-7% per year.
The major source of rising federal revenues was individual income tax payments. This in turn was driven by increasing employment, higher incomes, and capital gains realizations. Economic growth proved much more lucrative for the government than higher tax rates.
The budget deficit is now just under 3% of GDP and may shrink a bit further as the year progresses. This is a very manageable figure. Over the long haul, however, rising entitlement spending threatens to swell the budget deficit again, unless Congress can muster some restraint. We don't need to actually cut spending, we just need to slow the growth of spending and keep the economy growing in order to reduce the deficit further.