Jul 29, 2012 5:58 AM GMT
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.