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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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fveex2 February 05 2014 at 3:42 PM

The fruits of technology are only rewarded to the few, and the only fruit left for the common working man is a poisoned apple.

The 1% is buying elections and owns the media, while the people hurt most by the increasing wealth gap between the top and rest of us are more worried about the people who look different from them taking away their meager portion of the pie.

FreddieVee

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yonasolo February 05 2014 at 8:59 AM

Wake up America , be happy , Obama is paying your vote in advance BUT beware because :
Unemployment benefits ,minimum wages increases, affirmative action , welfare and food stamps guarantees you to remain a second class citizenship for generations
Use your brains.............................

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LA is Best February 05 2014 at 8:55 AM

If it had not been for the TP groups Dear Leader wouldn't have had ANY resistance and the deficit would have increased by at least a trillion dollars! Of course you bleeding heart types say "Oh we have to help these poor (government dependent) people"! All for their vote, right?

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flamskey February 05 2014 at 8:53 AM

As a small business owner I have grave concern about raising the minimum wage from a training perspective. It takes almost a year to train just for the basic skills and the increased cost of training, without some kind of subsidy, will make it impossible to afford.

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2 replies to flamskey's comment
gstripodi February 05 2014 at 10:06 AM

Flamskey,
Your concerns are very valid. We had a very workable system, including small businesses, now, many are forced to close. This 30 hr is rediculous and this insurance raises my blood pressure. I do hate to dash your hopes Sir, but, I do not think subsidy will be coming, and if it does it will be so minimal it will not make a difference. Check around, obama is interested in one thing, the lower class. Can you think why? Think! They took millions out of medacare and gave it to medicade. Medacare went up 1% medicade 30% think, why? You are in a dreadful situation and I am terrable sorry. Even if we can get rid of this Non Affordable act, it will take a long time to get us back if we can to a similar place where we were. The best health care system in the world

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John February 05 2014 at 10:10 AM

This is the same argument that comes up every time the minimum wage is going to be raised.. Not paying a living wage does not help anyone you hire including yourself..
If you can't afford to hire new workers, then say that, but to pay someone less than it takes to live for you to "Train" them is absurd.. What would you pay after you train them in a year? Minimum wage? Its called the cost of doing business, as I too have to hire people...I can pose the same question as to how much would it cost if you hired someone with experience?

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Mary Duffy February 05 2014 at 8:43 AM

Liar, Liar Pants ON Fire! It is still 3-4X what it was when Bush left office. Obumski's first Act was the jillion dollar bal- out, made necessary by the fall out of NINJA loans, a 1998 Clinton Mandate.
In some world, Democrat means liar. And my party, the GOP, had disappeared to a bunch of goody two shoes pandering to the right wing. What a mess!

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gstripodi February 05 2014 at 8:35 AM

There is nothing good to say about the "Non Affordable Act". If anyone thinks the deficit has gone down, I have a bridge to sell you cheap. This type of insurance was put into effect in Mass by Romnely and Mass almost went banrupt, yet, it was not mentioned. Your younger people 25-35 are rebelling and not signing up. This is going to turn Obama's plan into a dreadful tailspin and the country into a horrific situation. We had a health care system that worked better than any other country, and those without insurance WERE NEVER TURNED AWAY. They were treated along with paying patients. Yes, we paid for them.
Obama has been in office 6 yrs and raised the countrys debt to 5trillion dollars and rising. Boehner says he has an opinion about how to deal with the dept, is he keeping it a secret all these years for effect? We are printing money as fast as I am typing, thereby devaluing the dollar, something must be done. Obama states he has a pen and paper, in my opinion he should stop and think, this is not working and never will. Cut your losses and pray we can get back to some similiar point in the insurance department where we were.
Not to be left out, business are not flurishing, they are dropping people, because they cannot afford this "Affordable Insurance". People are chooing not to work when they realize how much thir insurance cost, and going on unimployment. Small business have folded because they were paying $1,050 a month, now it is over $5,000. This is progress? I think not,

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sky7728 February 05 2014 at 8:22 AM

More debt piled up in his presidency of what will be 8 years, than ALL other presidents combined. How anyone can call that leadership is beyond me.

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1 reply to sky7728's comment
John February 05 2014 at 10:13 AM

You would be wrong, on many levels.. To try and explain it to you would be in vein, however try adjusted dollars and point the finger at some Reps, who have always added to the debt historically... Sorry, this is just Faux babble..

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Owen February 05 2014 at 8:18 AM

more fudged numbers, by the obama circus............every thing is peacy keen??

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fmbbacu February 05 2014 at 8:17 AM

NUESTRO PRESIDENTE VA MUY BIEN .ES LASTIMA ,QUE NO LO PODAMOS ELEGIR POR CUATRO U OCHO ANOS MA.

F. BLANCONCO W.H.FLA

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rayser711 February 05 2014 at 8:15 AM

Impeach NOW !

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