White House: This year’s deficit to drop to $759B
WASHINGTON (AP) — The White House said Monday that the federal budget deficit for the current fiscal year will shrink to $759 billion. That’s more than $200 billion less than the administration predicted just three months ago.
The new figures reflect additional revenues generated by the improving U.S. economy and take into account automatic, across-the-board spending cuts that the Obama administration had hoped to avert.
The 2013 budget year ending Sept. 30 will be the first one of Obama’s presidency in which the deficit won’t exceed $1 trillion. Obama inherited a struggling economy and record deficits.
As a percentage of the economy, the new deficit would be half the size of what it was when Obama entered office. At the time, he vowed to cut the deficit in half by the end of his first term, a pledge that took longer to fulfill.
The White House projected that economic growth would be slightly slower in the coming years than it forecast in April. The report said the automatic spending cuts that kicked in during March will slow down economic growth this year from the 2.6 percent increase it forecast for the fourth quarter of this year to a 2.4 percent increase.
But the White House sees a slightly rosier jobs picture. It projects that unemployment will average 7 percent next year and reach 6.8 percent in the final quarter of 2014. That’s an improvement over the 7.2 percent unemployment it forecast in April as an average for 2014.
A 2011 deficit-cutting deal with Republicans has cut deficits somewhat, as did a tax increase enacted earlier this year on upper-bracket earners.
Last year’s deficit registered about $1.1 trillion. The White House earlier this year predicted the 2013 deficit would be $973 billion. The Congressional Budget Office has an even more optimistic $670 billion deficit projection for 2013, and it wouldn’t be unusual for CBO’s figures to turn out to be more accurate.
Over the upcoming decade, the White House predicts accumulated deficits of $5.8 trillion. In April, it predicted $5.3 trillion in total deficits over 2014-2023.
White House budget director Sylvia Mathews Burwell said that this year’s deficit is less than half of the record deficit posted four years ago when measured against the size of the economy. The 2013 deficit would equal 4.7 percent of gross domestic product versus the 10.1 percent of GDP in 2009.
The White House economic forecasts are more optimistic than those projected by the CBO and by a poll of top business economists by the Blue Chip Economic Indicators. But it is less upbeat than the projections of the Federal Reserve. For instance, while the White House believes the annual average unemployment rate in 2015 will be 6.5 percent, while the Fed has forecast an average 2015 jobless rate of between 5.8 percent and 6.2 percent.
Associated Press writers Andrew Taylor and Jim Kuhnhenn contributed.