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US deficit to drop to $514B, lowest of Obama's years in office

By Andrew Taylor

WASHINGTON (AP) - The U.S. budget deficit is set to fall to $514 billion this year, down substantially from last year and the lowest level by far since President Barack Obama took office five years ago, a congressional report said Tuesday.

The Congressional Budget Office credits higher tax revenues from the rebounding economy and sharp curbs on agency spending as the chief reason for the deficit's short-term decline.

But the budget experts see the long-term deficit picture worsening by about $100 billion a year through the end of the decade because of slower growth in the economy than they had previously predicted.

The report also updates the budget office's analysis of the new health care law. It now projects that Obama's signature legislation will lead to about 2 million fewer full-time workers by 2017, a significantly larger effect on employment than predicted previously. The reduction in employment, the agency said, is because many people will choose not to work or will work fewer hours because of the law's incentives, which include subsidized health coverage for people who don't have workplace coverage.

The agency also reduced its estimate of the number of uninsured people who will get coverage through the health care law. The budget experts now say about 2 million fewer people will get covered this year than had been expected, partly because of website problems that prevented people from signing up last fall when new markets for subsidized private insurance went live.

Website woes have largely cleared up, but the nonpartisan analysts said they expect 1 million fewer people to sign up through the new insurance exchanges, for a new total of 6 million in 2014. Enrollment will pick up in 2015, topping 20 million in 2016 and beyond.

CBO also revised its Medicaid projection down by 1 million, for a new total of 8 million in 2014. About half the states have accepted the health law's Medicaid expansion.

Last year's deficit registered $680 billion. Obama inherited an economy in crisis and the first deficits ever to exceed $1 trillion. The 2009 deficit, swelled by the costs of the Wall Street bailout, hit a record $1.4 trillion, while the deficits of 2010 and 2011 both registered $1.3 trillion.

The report predicted the economy will continue to rebound this year and grow at a 3.1 percent rate and by 3.4 percent next year. It foresees the jobless rate holding steady at 6.8 percent this year; the most recent nationwide unemployment rate registered 6.7 percent. It predicts the jobless rate remaining above 6 percent through the remainder of Obama's term.

The agency sees the deficit sliding to $478 billion next year before beginning a steady rise years through 2024 that would bring deficits back above $1 trillion a year.

"CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades," the report said, citing an aging population and decrease in the rate of growth in the labor force.

As it has for many years, CBO predicts the stark demographics of the nation's retirement programs, especially the growth of Medicare, would eventually spark a debt crisis. The growth of Medicare has been driven by medical inflation. But the ratio of people paying into the program and those receiving benefits is shrinking as the Baby Boom generation retires.

Economists say that too-high deficits and debt are a drag on the economy and squeezing out investment and, if unchecked, could eventually precipitate a European-style fiscal crisis.

Tuesday's report comes as Obama and Republicans in Congress are taking a respite in the budget wars that have periodically consumed Washington since Republicans took control of the House in 2011. The declining deficit numbers mean there's even less urgency to act now.

A December budget agreement and last month's follow-up spending bill could buy peace through November's mid-term elections. Republicans also appear to be taking a less confrontational approach to legislation needed this month to increase the government's borrowing limit to avoid defaulting on its obligations.

House Speaker John Boehner, R-Ohio, said Tuesday that Republicans have "a lot of opinions about how to deal with the debt limit. No decision's been made."

Asked if any debt limit bill could get 218 Republican votes - a majority in the House - Boehner said, "We'll see."

He added, "The goal here is to increase the debt ceiling. Nobody wants to default on our debt. But while we're doing this, we ought to do something about keeping jobs in the economy, about the drivers of our debt."

Join the discussion

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Brian Workman February 04 2014 at 2:57 PM

OOOPPPSSS!!! Did He forget to add that to his State Of The Union Speech; because of Slower Growth in The Economy than they had previously predicted!?. His speech from the King sounded so gooooood on TV!!

Flag Reply +9 rate up
fishhead80 February 04 2014 at 3:08 PM

Mr.ego had to screw with something that wasn't broken. It would've been cheaper quicker & easier to just make health care another welfare for the disabled & sick. Help whoever doesn't have it instead of this BS. Oh yeah if you can work.....Get Off Your Azz.

Flag Reply +10 rate up
DT February 04 2014 at 3:10 PM

So what does this mean? They only missed a balanced budget by 514 billion, and we as Americans think this is really great because of how incompetent they are...it's like pleading/acting stupid gets them a free pass on accountability...just.give every American a million dollars would be cheaper, or a billion even.

Flag Reply +6 rate up
David Dave Dreevs February 04 2014 at 3:14 PM

Oh Lord Almighty, we are only spending half a trillion dollars more than we are taking in, and going to $17 trillion in debt soon....... THROW ALL OF THEM OUT!!!!

Flag Reply +7 rate up
Hitechceo February 04 2014 at 3:15 PM

Keep cooking the books and with a different method of accounting it's amazing how the figures can change. Like the accountant who got the new jub by answering just one question "How much is 2 plus 2?" The successful answer is "What would you like it to be?"

Flag Reply +5 rate up
nick.milsl February 04 2014 at 3:15 PM

This is a must see. Google the term SLICK MARKET CASH and go to the top site. Click on the PENNY STOCK page and see what the rich are trying to hide from the rich.

Flag Reply +1 rate up
2 replies
usapaydirt nick.milsl February 04 2014 at 3:17 PM

O's got you begging too !

Flag Reply +1 rate up
Christopher nick.milsl February 04 2014 at 3:19 PM

rich are trying to hide from the rich ? their secret stash under the mattress ?

Flag Reply 0 rate up
Carl February 04 2014 at 3:15 PM

What happened to the shovel ready jobs? And what Happened to you can keep your doctor?

Flag Reply +9 rate up
1 reply
Christopher Carl February 04 2014 at 3:18 PM

ummm , you mean you believed it at first ?

Flag Reply +1 rate up
Janice February 04 2014 at 3:15 PM

I know that on the state level, two budgets are generated by two separate offices. Neither are even close to each others' budget and neither are correct. It all depends on how the pencil is pushed. So this doesn't excite me at all. I've seen it done on the state level every year. In my state (not saying which state) there were always two budgets prepared every year. If this happens on the State level, can you imagine what happens on the Federal level....just saying.

Flag Reply +2 rate up
lodgebrook February 04 2014 at 3:15 PM

Without a similar COLA % increase for Social Security recipients . . . when EVERYTHING
goes up because of MHW increase, Seniors will have been pushed OFF the cliff
with a choice of FOOD, MEDICINE, HEAT or death!

Flag Reply +5 rate up
1 reply
Mike! lodgebrook February 04 2014 at 3:26 PM

What is MHW?

Flag Reply 0 rate up
ghale77166 February 04 2014 at 8:40 PM

How about zero? Goid grief.

Flag Reply +3 rate up
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