WASHINGTON — The White House on Friday lowered its federal deficit forecast for the 2014 fiscal year by $66 billion, to $583 billion, on the basis of gathering economic momentum as evidenced by gains in hiring.
“The deficit has been cut by more than half as a share of the economy, representing the most rapid sustained deficit reduction since World War Two, and it continues to fall,” acting White House budget director Brian Deese said in a statement.
Despite the narrower deficit, Republicans and analysts raised concerns about high levels of debt over the long term. The White House projection shows that, even thought debt is on a declining path, it would reach 72 percent of GDP in 2024 instead of 69 percent as originally estimated, the Committee for a Responsible Federal Budget noted.
When it delivered its budget proposal to Congress in March, the Obama administration projected a $649 billion deficit for the fiscal year ending Sept. 30. The deficit peaked at $1.4 trillion in 2009 in the aftermath of the recession that ended that year.
The White House said it revised its forecast in the so-called mid-session review because the national unemployment rate has come down more rapidly than expected. The jobless rate fell to 6.1 percent in June from 6.7 percent in March, a six-year low. The administration said it now expects the deficit to be 3.4 percent of gross domestic product for the year, down from 3.7 percent, and to fall to below 3 percent of GDP in 2015.
President Barack Obama in recent speeches has pointed to an improving economic climate, citing gains in hiring, housing and manufacturing. But wages have lagged. and polls show many Americans remain still downbeat about their prospects five years into the recovery from the recession. “It is clear that much more needs to be done to accelerate economic growth,” the White House said Friday.
Since budget fights that led to the 16-day government shutdown in October 2013, some of the battle lines between congressional Republicans and the White House have softened. But Mr. Obama and GOP lawmakers are still at odds over spending levels.
Reacting to the mid-session review numbers,the Senate Budget Committee‘s top Republican, Alabama’s Jeff Sessions, said the deficit reduction could be greater if the president's spending request were held in check. “The modest reduction in deficits and debt claimed in the budget are accompanied by significant increases in federal spending,” he said