By Roberta Rampton
WASHINGTON, July 8 The White House on Monday
trimmed its outlook for U.S. economic growth but said the
deficit was shrinking faster than projected in a budget update
that was virtually ignored by Republicans ahead of tough
negotiations with Congress on spending cuts and raising the U.S.
The White House said it expected gross domestic product to
rise 2.0 percent this year and 3.1 percent next year - less than
the 2.3 percent and 3.2 percent forecast in President Barack
Obama's budget released in April.
Growth was trimmed due to "serious headwinds" from European
austerity measures and a slowdown in China, as well as
across-the-board budget sequester cuts at home, the White House
The White House slashed its estimate of the current year's
fiscal deficit to $759 billion, or 4.7 percent of GDP, from its
April forecast of $973 billion.
The mid-session budget and economic update normally creates
a stir in Washington. But Monday's report was virtually ignored
by Republicans who strongly oppose Obama's spending proposals.
"It kind of struck me that it was dropped into the void
here," said Robert Bixby, executive director of the Concord
Coalition, a nonpartisan budget reform advocacy group.
Bixby, who has worked with the group for more than 20 years,
said he could not remember any White House mid-session review
that had ever caused less attention.
That's because there are no serious talks going on right now
on the budget and deficit between the White House and Congress,
Bixby explained, adding he thinks the report would have had more
impact in August or early September.
"Normally if something like this comes out, you'd hope it
would jump-start negotiations. But right now there's nothing to
jump-start," he said.
Congress is not expected to pass Obama's budget this year.
Republicans have been focusing on deficit reduction and spending
cuts, dismissing Obama's arguments for programs to spur jobs,
financed in part by higher taxes on the wealthy.
The Senate passed a budget in March, and House Republicans
are currently working their way through spending bills. But the
two sides are far apart. The White House has said Obama would
likely veto any legislation that implements the House Republican
A government shutdown could loom if Congress fails to agree
on spending by the end of the fiscal year in September. Later in
the fall, Congress will also need to agree to increase the
federal borrowing limit - another pressure point.
Compared to recent estimates by the Congressional Budget
Office, the White House is projecting larger deficits relative
to economic output in the near term, at 3.5 percent of GDP in
2015 versus 2.1 percent for the CBO.
These trends reverse later in the decade, as the CBO
forecasts larger deficits later in the decade due mounting costs
for debt service and caring for the aging Baby Boom generation.
Meanwhile, Obama's budget proposes additional tax hikes and
some spending cuts that the White House maintains will keep
deficits gradually shrinking as a share of GDP.
White House Budget Director Sylvia Mathews Burwell said in a
statement that the report shows that Obama's budget "achieves
the core goal of fiscal sustainability by putting federal debt
on a declining path as a share of the economy."
The report's forecast of a shrinking deficit could remove
any sense of urgency to deal with issues important to
Republicans, like reforms to government-funded health care and
pensions, said Mark Kennedy, head of George Washington
University's Graduate School of Political Management.
"It complicates the deficit battle that will come when we
face the debt ceiling again," said Kennedy.