The U.S. budget deficit will fall to $514 billion US in 2014, the lowest level since President Barack Obama took office, according to a report from the Congressional Budget Office released Tuesday.

The U.S. is seeing higher tax revenues from the recovering economy and has sharply curbed agency spending as part of the budget deal between Democrat and Republican lawmakers.

The 2013 deficit was $680 billion, and that was reduced from the deficit of over $1 trillion the government had in 2010 to 2012. The deficit began rising in 2009, the year Obama took office amid a financial crisis that threatened to bring the world's largest economy to its knees.

Graphic: The U.S. debt limit's steady uphill climb

Obama has been struggling to balance the need for economic stimulus with demands for federal cutbacks ever since.

The CBO expects the deficit to decline further to $478 billion in 2015, but there could be pressure on spending because of high U.S. unemployment.

Even amid an apparent recovery, there are signs that a large number of people have dropped out of the workforce because they’ve been unemployed for so long. That means they are not paying taxes or spending much money, and that could make it difficult to further lower the deficit.

The U.S. currently has a federal debt of $17.3 trillion and will need to raise the debt ceiling by the end of February or the government will be unable to pay its bills.

Treasury Secretary Jack Lew urged Congress on Monday to act quickly to raise the federal debt limit to avoid uncertainty in the markets.

With files from the Associated Press