With stronger than expected tax receipts and reduced spending levels, the federal budget deficit will run 20% lower than expected this year, the White House announced Thursday.
The so-called Mid-Session Review published by the Office of Management and Budget forecasts a total shortfall of $1.316 trillion in 2011, down from the initial projection of $1.645 trillion in a February estimate.
That revised total mirrors the findings of the non-partisan Congressional Budget Office. Even the improved tally represents a historic high.
The report “underscores that we need to get back on a sustainable fiscal path, and that we also need to invest in long-term economic growth and job creation,” OMB director Jack Lew told reporters on a conference call.
The White House report also slashes the projected deficits for the remainder of the decade, a result of the debt-ceiling accord signed in August and the expectation that the congressional super committee will find further savings.
The work of that committee will be challenged by the economic climate, OMB states, while also teasing details of the jobs package President Obama is expected to unveil next week.
“Congress must appreciate that the economy is still wrestling with the after-effects of a very severe recession,” the summary document states. Steps the president may take to address that include “a mix of tax cuts to create jobs and provide economic security to the middle class, innovative infrastructure ideas to put people back to work, and some measures specifically targeted at the long-term unemployed and other specific sectors of the economy that are in particular need.”
The White House estimates only modest gross domestic product growth in the coming years, at rates lower than initially forecast. Still, it is not predicting a double-dip recession.
“Although growth is slower than we like, we are still forecasting slow and steady growth,” said Katharine Abraham, a member of the president’s Council of Economic Advisers.
Estimated unemployment is forecast to average 8.8% in 2011 and 8.3% by 2012, when Obama will be seeking a second term.