White House Projects Smaller Deficit, Slower Growth for 2012
Better late than never, the White House released the Office of Management and Budget's mid session review -- by law, due out July 16th -- which predicts a slightly smaller deficit and slower growth for both 2012 and 2013.
The White House budget office on Friday projected a $1.211-trillion deficit this year, down from the $1.327 trillion projected in February.
The mid-session review from the Office of Management and Budget (OMB) also projected lower economic growth in 2012 and 2013 than previously anticipated, and calls for $195 billion in economic stimulus to address an economy that "still faces significant headwinds."
While the $116 billion drop in the deficit could be used by both President Obama and congressional Republicans to argue they are making strides on the budget despite a poor economy, the predicted slow growth is more dismal news for the White House.
In fiscal year 2012, the White House downgraded its its projection to a 2.3 percent growth in gross domestic product compared to 2.7 percent when Obama released his budget in February. It lowered expectations in 2013 from 3 percent GDP growth to 2.7 percent.
The new projections incorporates economic data through June, so Friday's new 1.5 percent GDP growth advanced estimate for the second quarter of calendar 2012 is not included.
The revised deficit number total reflects both lower spending and lower revenue.
Spending is $143 billion less in 2012 and $49 billion less in 2013. This partially reflects the fact that Obama's stimulus measures were not enacted.
Revenue is $27 billion lower in 2012 and $138 billion lower in 2013. Technical revisions and lower economic growth contribute to the lower revenue.
But the update also increases the 2013 deficit from $901 billion to $991 billion.
That makes 5 straight years of trillion dollar deficits -- 6 if next year's anemic growth contributes to less revenue. Senate Budget Committee ranking member Jeff Sessions pointed out the obvious:
President Obama is currently running an ad saying he has a plan to ‘pay down the debt in a balanced way.’ He has made this claim in public remarks as well. But his updated budget — submitted two weeks after the legal deadline — reveals just how dramatically false this claim is.
And note that yesterday's news regarding GDP growth at 1.5% isn't even included in OMB's calculation for the review. This means that even the anemic 2.3% growth figure is already obsolete.
The OMB recommendation for another $195 billion in stimulus spending won't fly in the House and is probably dead in the Senate also. The administration wasn't serious about this proposal anyway, using it as just another political club to show how the GOP is "standing in the way" of job creation.