WASHINGTON (AP) - New
figures released Friday by the White House predict this year's federal
budget deficit will end up at $1.2 trillion.
That would make the fourth consecutive year of trillion dollar-plus deficits during President Barack Obama's administration.
The bleak figures, while
expected, are sure to add fuel to the already heated presidential
campaign, in which Obama's handling of the economy and the budget are a
main topic. Friday's release came as the government announced that U.S.
economic growth slowed to an annual rate of just 1.5 percent in the
second quarter of this year, as consumers cut back sharply on spending.
The White House budget
office also predicts for this year that the economy will grow at a
modest 2.6 percent annual rate and that the jobless rate will average 8
"The economic recovery that
began in 2009 will continue at a moderate rate and unemployment will
gradually decline," Jeffrey Zients, the acting White House budget
director said in a blog post. "The economy still faces significant
headwinds," he added.
The 2012 budget year ends
on Sept. 30. The White House also predicted that next year's deficit
will fall just short of $1 trillion, higher than it predicted in its
February budget release. The predicted deficit for 2012 actually
improved by $116 billion, but much of that was because Congress didn't
enact much of Obama's jobs plan.
But the White House
promises deficits will drop to about 3 percent of the size of the
economy by 2017, in part through $1.5 trillion in tax increases over the
The White House report -
released Friday afternoon with the Olympics poised to distract voters
for two weeks - again trumpets Obama's longstanding approach to tackling
the deficit. It includes tax increases on families earning above
$250,000, already-enacted "caps" on agency operating budgets and modest
savings from federal benefit programs like Medicare and Medicaid.
"Since taking office, the president has worked to restore fiscal responsibility," says the OMB report.
Under Obama's budget plan,
the total U.S. debt would reach $16.2 trillion by the end of the year
and soar to $25.4 trillion at the end of a decade's time.
The government is likely to
reach its borrowing cap - the subject of a fierce fight last summer
between Obama and Republicans - late this year or early next year, which
is going to require the next Congress and either Romney or Obama to act
together to increase the borrowing cap. That is seen by many as an
opportunity to force lawmakers to finally tackle the country's major
Romney, for his part,
offers relatively few specifics on the budget but promises to bring
total government spending down to 20 percent of the U.S. economy by the
end of a first term in 2016. That is roughly in line with where it was
during Republican George W. Bush's presidency. Government spending now
equals 24 percent of gross domestic product.
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