US

US predicts rise in economic growth as deficit declines

By Roger Runningen (China Daily)
Updated: 2010-07-26 15:13

WASHINGTON - A mid-year budget review by the Obama administration forecasts the US deficit will be $1.47 trillion this year and $1.42 trillion next year as the country struggles to recover from the recession.

This year's budget shortfall is $84 billion less than President Barack Obama's budget office projected in February because of lower than projected spending for unemployment and some government programs. Still, the total would be a record and represent 10 percent of gross domestic product.

The administration projects the US economy will grow 3.2 percent this year, compared with 2.7 percent forecast in February. Growth is projected at 3.6 percent next year and 4.2 percent in 2012. The review says the unemployment rate will average 9.7 percent this year, 9 percent next year and won't fall below 6 percent until 2015.

"The most pressing danger we now face is unacceptably weak growth and persistent unemployment," budget director Peter Orszag said in a conference call with reporters last Friday as the White House released the annual report.

The review was published less than four months before the midterm elections that will decide control of Congress. Republicans, seeking to overturn Democratic majorities in the House and Senate, say they will make government spending and debt a top issue in the campaign.

Representative Paul Ryan of Wisconsin, the top Republican on the House Budget Committee, said Obama, after 18 months in office, must take ownership of the budget instead of laying blame on the previous administration. The mid-year review is "a revealing look at the costly consequences of this administration's relentless expansion in the size and scope of the federal government," Ryan said in a statement.

Bloomberg News