US economy playing against President Obama’s re-election bid
The White House cut its outlook for US growth in 2012 and 2013 on Friday, hours after data showed the economy grew at a tepid pace in the second quarter, raising concerns about a slowdown that could mar President Barack Obama's re-election chances.
In its semi-annual budget review, the White House said it expected GDP to rise 2.3% this year and 2.7% next year, less than the 2.7% and 3.0% growth projections it made in February.
The economy still faces significant headwinds that have held down growth and limited gains in employment, Jeffrey Zients, acting director of the White House Office of Management and Budget, said in a statement accompanying the review.
But the White House brightened its forecast for unemployment - one of the key barometers of Obama's economic leadership - to a 8.0% rate this year and 7.7% next year, from its first estimate of 8.9% in 2012 and 8.6% in 2013.
It also said the deficit would be slimmer this fiscal year - from October through September - than first anticipated, at 1.211 trillion dollars instead of 1.327 trillion and be slightly wider than first projected in fiscal 2013. Over the next decade, the White House said cumulative deficits would be 240 billion lower than it forecast in February.
The mid-session review, like the original White House budget proposal released in February, assumes Obama's economic and job growth proposals will be enacted despite the stark partisan divisions in election-year Washington.
Zients said it also reflects the administration's belief that Congress can and must enact a comprehensive and balanced deficit reduction package to avoid mandatory spending cuts that are due to take effect in January.
Kent Conrad, a North Dakota Democrat who chairs the Senate Budget Committee, said after the mid-session budget review was released that lawmakers needed to be ready to compromise to avoid damaging the economic outlook.
The solution must include a comprehensive and balanced long-term deficit reduction plan. That can only happen if both sides agree to move off their fixed positions, he said.