Obama Admin. Projects Lower Deficit Along With Lower Growth For 2012/2013

The mid-session review from the White House’s budget office, The Office of Management and Budget (OMB), projected  a $1.211-trillion deficit this year along with lower economic growth in 2012 and 2013. They also state that we need $195 billion in economic stimulus to address an economy that “still faces significant headwinds.”

The deficit projections are revised down from $1.327 trillion, while growth in gross domestic products (GDP) expectations were lowered to 2.3 percent from 2.7 percent when Obama released his budget in February. 2013 GDP growth was lowered from 3 percent to 2.7 percent while deficits for that year will increase from $901 billion to $991 billion.

“Today’s dreary economic growth numbers coupled with an administration forecast that indicates next year’s deficit will mark a historic fifth year in a row of trillion dollar deficits underscores what the American people already know — that the president’s economic plan isn’t working,” said Senate Minority Leader Mitch McConnell (R-Ky.).

Republicans pointed out that like the February budget, the update adds to the national debt even while assuming that the Bush-era tax rates for the wealthy expire.

“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,” Senate Budget Committee Ranking Member Jeff Sessions (R-Ala.) said. He called on Obama to pull the ad down.

“The President’s $1.8 trillion tax increase is not used to reduce the deficit but to fund this massive increase above what we are currently planning to spend,” he added.

Democrats have pointed out that even under the House GOP budget, the national debt would increase.

The lead Senate Democrat on budget matters said the large deficit and poor economy are not surprising, and that Obama should not be blamed.

“History tells us that when a downturn is accompanied by severe damage to financial institutions, the recovery takes longer,” Senate Budget Committee Chairman Kent Conrad (D-N.D.) said. “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.”

He called on Congress to agree to a balanced deficit package that includes entitlement cuts and tax revenue increases.

“Republicans must yield on revenues, and Democrats must agree to entitlement changes. And it is important that the agreed upon plan be phased-in carefully so that the changes don’t worsen the fragile economic recovery,” he said.

Acting OMB director Jeff Zients in a release blames “Republicans in Congress” for failing to adopt Obama’s jobs proposals. The budget update assumes these will be enacted at a later date than earlier assumed.

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