White House trims economic forecast ahead of Congress budget battle

Mon Jul 8, 2013 7:00pm EDT
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By Roberta Rampton

WASHINGTON (Reuters) - The White House on Monday trimmed its outlook for economic growth but said the deficit was shrinking faster than projected in a budget update that was virtually ignored by Republicans ahead of tough negotiations with Congress on spending cuts and raising the U.S. debt limit.

The White House said it expected gross domestic product to rise 2.0 percent this year and 3.1 percent next year - less than the 2.3 percent and 3.2 percent forecast in President Barack Obama's budget released in April.

Growth was trimmed due to "serious headwinds" from European austerity measures and a slowdown in China, as well as across-the-board budget sequester cuts at home, the White House said.

The White House slashed its estimate of the current year's fiscal deficit to $759 billion, or 4.7 percent of GDP, from its April forecast of $973 billion.

The mid-session budget and economic update normally creates a stir in Washington. But Monday's report was virtually ignored by Republicans who strongly oppose Obama's spending proposals.

"It kind of struck me that it was dropped into the void here," said Robert Bixby, executive director of the Concord Coalition, a nonpartisan budget reform advocacy group.

Bixby, who has worked with the group for more than 20 years, said he could not remember any White House mid-session review that had ever caused less attention.

That's because there are no serious talks going on right now on the budget and deficit between the White House and Congress, Bixby explained, adding he thinks the report would have had more impact in August or early September.   Continued...

U.S. President Barack Obama (R) leaves with Vice President Joe Biden (2nd L) after delivering remarks on his management agenda in the State Dining room of the White House in Washington, July 8, 2013. REUTERS/Jason Reed