The FY2012 federal deficit will be lower than projected in February, according to the Office of Management and Budget (OMB).
In its annual Mid-Session Review of the budget and the administration’s economic projections, OMB now expects the FY2012 deficit to be $1.211 trillion, about $116 billion lower than it projected when the FY2013 budget was released. The lower projected deficit is due to lower estimated expenditures, which will more than offset lower than previously expected revenue.
OMB projects the FY2013 deficit ($991 billion) to be slightly higher than previously estimated by $90 billion due principally to lower revenue. However, OMB expects deficits for the next 10 years to improve ($-240 billion) from earlier estimates. Deficits are projected to be lower because economic and technical changes will result in lower spending for Medicare, Medicaid, Social Security, and net interest.
OMB also expects the deficit as a percentage of Gross Domestic Product (GDP) to fall from 7.9 percent in 2012 to 2.6 percent by 2018.
The OMB projections are based on the administration’s economic assumptions and its proposed spending and revenue proposals.