White House: Deficit would near $1T again next year, drop sharply in 2014 under Obama plan
By Lori Montgomery,
The nation’s budget deficit would hover around $1 trillion for a fifth straight year in 2013 if Congress finally enacts President Obama’s policies for boosting the sluggish economy, the White House said Friday.
Administration projections for the 2012 budget deficit fell slightly, to $1.2 trillion, due in part to the failure of Congress to adopt major pieces of the jobs package Obama unveiled last fall. But White House projections for next year’s budget gap jumped from $900 billion to $991 billion on the assumption that those provisions would ultimately be enacted.
The deficit would plummet in 2014 under Obama’s policies, settling around $600 billion a year for the rest of the decade, according to the projections. Deficits of that size would permit borrowing to stabilize and allow the national debt to start drifting downward when measured against the size of the overall economy. But the debt would remain elevated by historical standards, stuck above 75 percent of gross domestic product for the rest of the decade.
The White House also forecasts that the nation’s unemployment rate would fall to 7.9 percent by the end of this year, around the time of the Nov. 6 presidential election. That would mark the first time the jobless rate dipped below 8 percent since Obama took office in January 2009.
Amid fresh evidence that the nation’s economic recovery may be stalling out, the White House forecast that unemployment would fall more rapidly than it predicted in February, the last time the administration issued projections.
However, the White House predicted that overall economic growth would slow somewhat from its February forecast, with GDP growing at an annual rate of 2.3 percent this year and at 2.7 percent in 2013 under the president’s policies.
The Commerce Department reported Friday that the nation’s GDP grew at a sluggish 1.5 percent from April to June, not enough to lower the unemployment rate, which remained at 8.2 percent.
The forecast “notes the economy still faces significant headwinds that have held down growth and limited gains in employment. Enactment of some of the President’s proposals to promote near-term economic and job growth in the face of such headwinds has been delayed by Republicans in Congress,” Jeffrey Zients, acting director of the White House Office of Management and Budget, said in a blog post.
The forecast “assumes these proposals, which have traditionally earned bipartisan support, will still be enacted,” Zients wrote, shifting much of their cost from this year into 2013.
Democrats warily defended the mixed forecast, including the persistently high levels of red ink.
“No one should be surprised by this year’s deficit, nor by the stubbornness of the economic recovery,” Senate Budget Committee Chairman Kent Conrad (D-N.D.) said in a statement.
“Without a doubt, the Great Recession that President Obama inherited has taken its toll on economic growth and, thus, on the nation’s balance sheet. While the Federal response, which began under the last administration, averted an even worse calamity, the depth of the recession and the slow recovery means the country has been unable to dig out of the large deficit hole that this administration faced when it came into office.”
Republicans, however, seized upon the disconnect between Obama’s campaign message and his budget proposals, which would add nearly $6.5 trillion to the national debt over the next decade by White House calculations.
“President Obama is currently running a campaign ad saying he has a plan to ‘pay down the debt in a balanced way,’” said Sen. Jeff Sessions (Ala.), the senior Republican on the Senate budget panel. “But his updated budget—submitted two weeks after the legal deadline—reveals just how dramatically false this claim is. These ads ought to be pulled down....
“No change is proposed to our dangerously unsustainable debt course.”