White House projects $1.2 trillion deficit, lower economic growth in 2012

White House projects $1.2 trillion deficit, lower economic growth in 2012

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.

"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 McConnellAddison (Mitch) Mitchell McConnellHoyer signals House vote on bill to 'remove' debt limit threat Biden signs bill to raise debt ceiling On The Money — Progressives play hard ball on Biden budget plan MORE (R-Ky.).

Republicans pointed out that like the Feburary 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 SessionsJefferson (Jeff) Beauregard SessionsTrump criticizes Justice for restoring McCabe's benefits McCabe wins back full FBI pension after being fired under Trump Overnight Hillicon Valley — Apple issues security update against spyware vulnerability MORE (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.

The mid-session review was due before July 16, and Republicans pounced on the administration for failing to meet that deadline. 

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. 

— This story was updated at 4:40 p.m.