Date
23 January 2017
The new budget forecast includes a US$7 billion reduction in Social Security spending because fewer than expected younger beneficiaries are drawing benefits. Photo: PBS
The new budget forecast includes a US$7 billion reduction in Social Security spending because fewer than expected younger beneficiaries are drawing benefits. Photo: PBS

White House slashes deficit forecast on higher fiscal revenue

A sharply lower fiscal deficit is being forecast by the White House for the US economy thanks to higher revenue and lower spending.

The White House expects this year’s budget deficit to come in a US$455 billion, down US$128 billion from its last estimate in February

It forecasts real gross domestic product growth of just 2.0 percent for 2015, according to Reuters which cited a mid-season budget review by the Obama administration.

This is down from 3.0 percent estimated in February based on data collected before severe winter weather ground the economy largely to a halt in the first quarter.

The White House also reduced its fiscal 2016 deficit estimate by US$45 billion to US$429 billion, or 2.3 percent of gross domestic product.

The deficit peaked at US$1.41 trillion, or 9.8 percent of GDP, in 2009 amid a deep recession at 

The reductions stem from an increased rate of revenue collection and technical revisions based on recent tax reporting data, partially offset by the weaker economic forecast, which is now largely in line with private sector forecasts.

In total, the White House increased fiscal 2015 revenue estimates by US$72 billion from the February forecast while the spending estimates fell by US$56 billion, largely due to slower-than-expected outlays across a range of programs.

These include a US$7 billion reduction in Social Security because fewer than expected younger beneficiaries are drawing benefits.

The White House projects an additional US$229 billion reduction in Social Security spending over the next 10 years because of new, lower inflation assumptions that will slow cost-of-living increases.

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