The U.S. government ran a $1.089 trillion budget deficit in the fiscal year that ended Sept. 30, a smaller gap than the year before but still stubbornly high and likely to fuel further debate over tax and spending policies.

The deficit was roughly 7% of the country’s 2012 gross domestic product, a measure of the total output of goods and services, the Treasury Department said Friday. That is the lowest share since President Barack Obama took office, but still one of the largest since World War II.

The 2012 budget gap was down from the 2011 deficit of $1.297 trillion, or 8.7% of GDP. The deficit peaked in 2009 at $1.413 trillion, or 10.1% of GDP.

The deficit declined last year due to growing tax revenue and falling spending. Federal spending fell for several reasons, including the expiration of temporarily higher Medicaid payments, a decline in unemployment benefits and reduced military spending. Still, government spending as a share of the economy hit 22.7% in 2012. That is lower than in 2009, 2010 and 2011, but higher than any other year since 1985.