White House downgrades GDP numbers
President Obama quietly downgraded his own evaluation of the U.S. economy last week, issuing an updated budget that showed slower growth than he’d projected just five months ago — a striking acknowledgment of what he called economic “head winds.”
In a report issued Friday afternoon, the White House said it expects gross domestic product to grow at a rate of 4.3 percent in 2012 and 2013, or down three-tenths and four-tenths of a point, respectively. The downgrade extended through 2015, signaling a slower-than-expected recovery well into the next president’s term.
The numbers come as Mr. Obama is battling for re-election against presumptive GOP nominee Mitt Romney, who is arguing on the campaign trail that the president deserves blame for not having pulled the country out of its slump yet.
The updated budget also showed the federal government will run a deficit of $1.2 trillion this year, and will again flirt with a trillion-dollar shortfall next year. If those projections come true, it would be the fifth straight year the government has run that deeply in the red — a level it had never reached until 2009.
Spending in 2012 is actually running at a slower pace than the White House predicted in February, but will still reach $1.2 trillion. The deficit for 2013 is now projected to be $991 billion, which is nearly 10 percent deeper than projected in February when Mr. Obama sent his budget to Congress.
Jeffrey Zeints, Mr. Obama’s acting budget director, blamed Republicans for a sluggish economy he said is hurting the fiscal picture — but he said the White House is still counting on Congress to pass the president’s tax plan and his outline for more spending on state and local governments, for example, which Democrats say will boost the economy.
“Enactment of some of the president’s proposals to promote near-term economic and job growth in the face of such head winds has been delayed by Republicans in Congress,” he said in a memo accompanying the budget update.
In the report, the White House said the deeper deficits next year are because taxes are running lower than expected and because some of the president’s stimulus payments have been pushed off until 2013.
The deficit in 2008, President George W. Bush’s last full year in office, was $459 billion — which was then a record. In fiscal 2009, which covered the last four months of Mr. Bush’s term and the first eight months of Mr. Obama’s term, the deficit ballooned to $1.4 trillion as the government coped with the Wall Street crisis.
Since then, deficits have remained stubbornly high, totaling $1.3 trillion in 2010 and 2011 and projected to reach $1.2 trillion this year.
The White House found some good news in the numbers, saying that over the next decade the deficit will be $240 billion lower. And the White House said the deficit is still on track to drop under $600 billion by 2017 — though it never goes lower than $543 billion in any year.
Across that full decade, the country will rack up deficits of $6.4 trillion.
Sen. Jeff Sessions of Alabama, the ranking Republican on the Senate Budget Committee, said the White House report is bleak and undercuts his own campaign promises of paying down the debt.
“President Obama is currently running a campaign ad saying he has a plan to ‘pay down the debt in a balanced way,’ ” Mr. Sessions said. “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.”
The White House projected that businesses actually will do better on their bottom lines, but workers will do worse than the administration had guessed in February.
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