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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."

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HuntnFreak123 February 04 2014 at 9:47 PM

Yep - cut govt spending on Vets etc and then report it as good news..

Flag Reply +2 rate up
ricklexus February 04 2014 at 6:59 PM

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."

No one is talking about a debt default...stop lying Mr. President. We have plenty of money to pay our debt interest....enough with the scare tactics.

Flag Reply +6 rate up
da.wa4 February 04 2014 at 2:38 PM

Quit writing that Obama inherited an economy in crisis. He was not born president. He chose to run for president. And it gives him an east out because he has not done anything to help us.

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1 reply
ron4342 da.wa4 February 04 2014 at 2:49 PM

Quit ignoring the facts. When Obama took office about 750,000 people were losing their jobs each month. The stock market had fallen to around 8000. The United States was in recession and almost every economist in the country was predicting a depression that would rival the 30's. Since he has taken office the job loss has been reversed, the stock market has risen to around 16,000, and the economy is slowly recovering.

Flag Reply 0 rate up
koea34 February 04 2014 at 6:57 PM

Is this a joke the deficit dropping when the budget for this year will be gone by the end of the month and have to increase the appropreation to finish this year out .

Flag Reply +9 rate up
Richard February 04 2014 at 10:14 PM

This deficit MUST not merely decrease, it must go to zero. Then it must become a surplus that can finally be applied toward reducing and paying off our national DEBT. Why isn't anyone saying that ANY deficit continues to increase our national debt -- owed by our children and grandchildren?

Flag Reply +4 rate up
dchristman51 February 04 2014 at 6:53 PM

Why do you distort the truth? State the actual number of people that are not working. Just because people gave up looking for jobs does not mean that they can't work. So you are saying that those people account for nothing. How pathetic!

Flag Reply +10 rate up
dilligaffudems February 04 2014 at 10:18 PM

4 more years with a liberal in office after barrack Hussein does his damage and this country will be Detroit been fun while it lasted

Flag Reply +1 rate up
longarc February 04 2014 at 2:37 PM

How can anyone believe anything coming out of Washington.!

Flag Reply +7 rate up
2 replies
bottomtime321 longarc February 04 2014 at 2:39 PM

We Can't, especially coming from Obama's mouth.

Flag Reply +4 rate up
1 reply
faturism bottomtime321 February 04 2014 at 2:46 PM

If his lips are moving, he's lying

Flag 0 rate up
Walt longarc February 04 2014 at 2:41 PM

RIGHT IT HAS TO BE BAD NEWS FOR YOU RIGHT WING NEGATATIVE PEOPLE TO BELIEVE, THAT IS THE BEAUTY OF THE NEW REPUBLICAN\TEA PARTY PEOPLE, IT HAS TO BE BAD OR IT IS A LIE, WHAT A WAY TO LIVE.

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1 reply
navalphoto Walt February 04 2014 at 2:46 PM

What is wrong with limited government? Want to cut the budget even more. Get ut of the foreign countries we are now in, cut all department by 3% every year for the next ten years, and reduce the pay to members of Congress to whatever is the median income of the area that they represent, that alone will save 90 million a year.

Flag 0 rate up
jrb359 February 04 2014 at 3:47 PM

Just imagine what the deficit would be without the Dems taxing and wasteful spending!

Flag Reply +3 rate up
flash12todd February 04 2014 at 3:47 PM

This is a Left perspective of the Administration. What you read here is not true journalism.

Flag Reply +8 rate up
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